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Language Site Babbel Ditches Freemium Model, Says Ads Aren’t Enough

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Digital media owners from newspapers to music sites have made a virtue of the freemium business model—where users get a basic service for nothing but must pay to get the full, unadulterated product. But now language site Babbel is ditching the part-free hybrid model because it “just doesn’t work”. As founder Markus Witte writes: “It simply is not possible to build a high-quality online learning environment while simultaneously selling ad space effectively.”

SEE ALSO: @ C&binet: Free Content Must Pack A Paid Punch

Berlin-based Babbel has built up 500,000 users and had always planned to charge only some of them for extra services, but now everyone will have to pay between €4.95 and €8.95 a month. Witte adds that distracting adverts may work for news and social networks, but not for online education. On a more fundamental level, he says Babbel has “some financing and loans, but ultimately, we have to pay our own bills…”

The freemium model may not work for online education sites but it’s an integral part of others sectors: here are examples of businesses where publishers need to give away something to encourage users to pay for content:

Newspapers: Just as FT.com and WSJ.com allow limited, try-before-you-buy access to their online news, no newspaper can erect a 100 percent, impenetrable paywall and simply hope readers will pay for access. B2B publisher Emap’s new paywalls allow readers to come in via Google (NSDQ: GOOG) searches because its sites can’t afford to cut off that stream of new users; Rupert Murdoch’s much-heralded paywalls will “not go right to the ceiling”, as the man himself puts it.

Music: Spotify, We7, Lastfm and Deezer are just some of the music-streaming sites to offer free, ad-supported models alongside paid-for ad-less options, which often throw in offline and mobile listening as a sweetener. The fact all of them have moved to add premium subscription services heavily suggests that despite a growing audience, ads aren’t enough to sustain a music business.

Games: To counter the threat of games piracy, Finnish developer RedLynx put its new title onto P2P file-sharing sites—but the pirated version lacks the crucial leaderboards where gamers compare scores. If they want the full version, gamers have to pay $9.99 and so far almost 150,000 punters have been happy to do so.

Nov 11, 2009 6:38 AM ET

Babbel


Posted In: Countries, Europe, Germany

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