How Does Duolingo Make Money?

How Does Duolingo Make Money?
Duolingo is one of the foremost educational apps in the world and with a valuation of $3.15B they've managed to monetize and gamify translation as a whole.

Duolingo is an app everyone has played with at some point. After all, it’s free to use and you can study just about any language.

But did you know that Duolingo’s net worth as of January 13, 2023, is $3.15B?

For ten years they’ve gamified languages to become the most downloaded education app on the globe.

This is how they set themselves up for success from step one to launch:

What Is Duolingo?

If you’ve never used Duolingo before, you’ve missed out on a masterful experience in mobile design. Use Duolingo to learn one of forty languages not by boring old memorization like a school would, but by playing it as a game of quizzes and challenges, all encouraged by the app mascot Duo who inspires you along the way.

This is because co-founder Luis Von Ahn had the foresight to understand that the best learning apps don’t feel like learning at all. In fact, learning becomes second nature as users play their way through the app.

But how did they manage to become the top educational app in the world?

The answer is by being ahead of the game every step of the way.

How It All Started For Duolingo

The year is 2009, and Luis Von Ahn has a sudden thought. What if the internet could be translated by the millions of native speakers who are already using the internet? At the same time as he had that idea, computer translation was still woefully inadequate - the only option was to pay for hand translation by a human.

Duolingo is the culmination of the idea of ‘crowdfunding language translations’. There was a challenge to overcome before they could launch their idea, however - how do you convince hundreds of thousands of users to do translations for free?The answer became clear with some market research. People want to learn new languages all the time, and they typically do so by paying for tutoring from a teacher or software application. With the Duolingo app, however, they’re actually playing a game, learning, and translating things for the web all at the same time.

But what made Duolingo so different from other translation or language learning software options at the time?

Back in 2012 when Duolingo was being launched, the landscape for educational apps was mostly web-based. Companies were pouring their resources into their websites and launching web platforms. But Duolingo did the exact opposite and pooled all their resources into creating a high-quality mobile app that performed well from launch.

People wanted web app levels of quality, but with the added convenience of taking it with them on their mobile devices.

And it worked - within twelve months they became the iPhone app of the year with over 10 million downloads achieved.

The Duolingo Money Models

Duolingo is free to use, but that doesn’t mean they don’t get paid. In fact, old Duo has diversified his income significantly, ensuring they have money coming in from multiple streams.

Let’s look at them in more detail below:

  1. Subscriptions

Like many free apps, Duolingo offers a paid subscription model. Available as an option in-app, this is known as Super Duolingo, a paid version that allows the user to study their language of choice without ads popping up, for them to gain unlimited ‘hearts’ or tries, and other unique features like streak freezes and additional challenges.

  1. Display ads

Again like other free apps, Duolingo makes a good amount from display ads. For non-super-users, display ads will pop up during the course of their learning challenges or be displayed between ‘levels’. 

This means Duolingo makes money from advertising companies that are interested in this subset of users. Duolingo ads are not sourced from the app itself however and instead are drawn from other platforms like Google and Facebook to ensure that the ads are targeted to the mobile user’s preferences.

  1. Duolingo Classes

Not interested in the app experience alone? Want to have a space where you can have conversations and practice all that new vocabulary with other people? It’s one of the best ways to improve a spoken language. 

That’s where Duolingo classes come in. These are paid classes in which users can speak aloud with other learners about a variety of topics in their chosen language of study. Much like traditional language classes, these are paid sessions hosted by community-ranked teachers that you can join based on the level you’re at. 

Duolingo has put a lot of emphasis on its classes and testing system (see below) because they are first and foremost an educational platform, not a translation business alone.

  1. Language Tests

Studying a new language with the goal of landing a better professional role? 

Chances are good that you’ll need some kind of certification in order to qualify if you’re applying outside of your native language. Here Duolingo again serves their community by allowing users to take part in official language tests that result in a certificate that can accompany any job application. 

These go for around $50 a pop and are accepted by over 4000 global institutions.

  1. Translation Data

Now we get to the meat of the situation - the data garnered by so many translations taking place in one application. This is by far the most valuable revenue stream: here is how it works.

Duolingo actually monetizes translated data by selling the translations to companies that are in need of them. This was the core of their original revenue model, and it still operates at a high level today. Members of Duolingo have been quietly translating content from BuzzFeed and CNN into Spanish, French, Portuguese, and other languages since back in 2013.

BuzzFeed and CNN pay for these translations, which come from actual language-learning students around the world. Native speakers of Spanish, French, and Portuguese who use the site to learn and practice English have been working to translate BuzzFeed and CNN articles. which have been published in the new international versions of the two sites.

But as mentioned above, the focus is always on learning over selling. And that’s what has made Duolingo so successful in the past decade - much like Waze, the community-based approach and challenges are not only immersive but they actually work.

The Proof Is In The Pudding

Research has shown that participants using Duolingo to learn languages like Spanish at the college level performed better than their non-Duolingo counterparts. Overall the average improvement in language abilities was 91.4 points and the improvement was statistically significant.

And the results continue to go along this trend. Duolingo is an app that is both highly useful to the public and highly valuable as a company, and there’s no sign that any of that will slow down soon. 

As for the future, who knows what will come next? ChatGPT is getting better at translation, and I would not be surprised if Duolingo is at the forefront of adopting AI into its app solution.

Andrew Amann
Andrew Amann
Building a NineTwoThree Studio
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