Spotify has a ~27% gross margin as it pays out >65% of its revenues to labels One way to see is that is considering gross margins and amount spent on content. In addition, the use of data and AI to stitch together different discrete pieces of lessons in a personalized manner means that less needs to be spent on “content creation”. However, what is interesting is that given that the content is a mix of audio and text content, it is cheaper to create in large volumes than say the video content of Netflix and Peloton or the audio content which Spotify needs to license. These courses are “original content” and designed in-house by a team of experts in learning science and second language acquisition.
Each Lesson consists of short, bite-sized exercises that help learners practice reading, writing, speaking, and listening skills.” In many ways, Duolingo is a content business like other subscription businesses such as Netflix, Peloton, Spotify, and others.ĭuolingo’s content, its courses are “made up of Skills, each of which is divided into Levels, with each Level made up of a series of Lessons. This is also illustrated from Vivek’s tweet below, which shows that Duolingo has a low share of sales and marketing spend as a percentage of gross profit compared to other consumer subscription businesses. It has been able to create a brand and almost become synonymous with language learning, as the below snippet highlights:įor example, on Google, people search the term “Duolingo” nine times more often than “learn Spanish.” Īnd in the period between 2011 to the end of 2019, Duolingo spent less than $15M on external marketing, highlighting the importance of organic and word-of-mouth growth. It has been downloaded over 500M times and has more than 40M monthly active users. As such, Duolingo has gotten a lot of organic word-of-mouth growth.
It is a freemium product in the sense that there is a premium tier, but that premium tier unlocks boosts and benefits and not any “new content” as such.Ĭompared to a lot of the competition and alternatives for language learning, Duolingo’s “free” price tag is of tremendous value. One of the somewhat unique things about Duolingo is that all the content is accessible completely for free.
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