How Duolingo, the free language learning app, profits from AI machine learning

Duolingo, which has been the top download in the education category on the Apple Store, not only has a market value of $7.7 billion, but also the majority of its revenue does not come from paid subscriptions and ads. Only 8.6% of users who download the Duolingo language learning app are paying users, and the in-app ad revenue sharing is only 8%. How does Duolingo manage to hold a 60% market share in educational apps and still be profitable?

The Wall Street Journal interviewed Duolingo CEO Luis Von Ahn to uncover the secret of how Duolingo profits with the majority of users using the free version.

The CEO of Duolingo stated that 80% of the company's revenue comes from paid users. Retaining these profitable paid users is crucial for profitability. To retain users, the company invests heavily in developing AI systems and AB testing to maintain user loyalty and subscription revenue.

Duolingo's co-founder and CEO Luis Von Ahn is from the small South American country of Guatemala. In his TED talk, he shared his vision and ideals for founding Duolingo, making language learning not a barrier or an economic burden. Currently, Duolingo's paid users mainly come from wealthy countries like the United States and Canada, while poorer countries like Vietnam, Brazil, or Guatemala use the free version.

Duolingo allows users from both poor and wealthy countries to learn languages. Von Ahn believes that whether it's getting wealthy users to pay for learning or providing free access to poorer countries, Duolingo can become as popular as TikTok and keep users engaged with the app.

Von Ahn previously founded reCAPTCHA and later sold the company to Google, achieving significant success in machine learning and cryptography.

The subscription version of Duolingo costs $10 per month. Subscribers can enjoy an ad-free experience and have "unlimited lives," allowing them to immediately revive after a challenge failure. The algorithm also keeps them engaged with the app.

Duolingo Fun Courses: Algorithms Similar to Game Mechanics

The biggest advantage of using Duolingo is the ability to complete courses almost stress-free, progressing through levels like a game, earning experience points and heart rewards for each task completed. Besides the sense of achievement upon advancing to the next level, users can also add friends and turn it into a social app where they can find classmates.

The way to keep users engaged is through a "psychological" reward system that offers both challenges and praise, turning learning into an enjoyable game.

Duolingo has a daily-based "Streaks" scoring system, which calculates the number of consecutive days a user has taken up the daily challenges. If a user fails to keep up with the daily challenges, the streak resets to zero. This addictive mechanism is applied to educational learning, requiring learners to stick to the app, thereby enhancing learning efficiency. Interestingly, data shows that Japan ranks first in daily learning persistence, while a South American country ranks last.

AI and AB Testing Analyze User Habits, Push Customized Messages

Duolingo analyzes users' learning progress and completion frequency on the app through AI learning and sends interesting messages to users via push notifications. The Duolingo owl, representing the app, generates different push notification content based on AI machine learning data.

Duolingo's AI algorithm is like putting three slot machines together to test the probability of pulling out "777" or specific combinations of symbols and numbers. By analyzing data and pushing messages to users, the system tests whether these messages can bring users back to continuously play quizzes, enhancing the stickiness and loyalty to the app.

AI Collaborates with Humans to Create Interesting Memes

The key to Duolingo's success lies in balancing learning with busy modern lifestyles. If learning courses are too dull, it can disrupt the motivation to learn. Duolingo sends users messages tailored to them, ensuring they continue using the app. The timing of these push notifications is estimated by algorithms, analyzing the last time the user used Duolingo to generate similar timing for push notifications, capturing the time when users are available to use Duolingo.

AI Video Feature Launches for Conversations with Virtual Character Lily

Duolingo introduces the AI Video feature. Duolingo MAX is priced at $30 per month or $168 annually, allowing users to have video conversations with the virtual character Lily for chat interactions. This new AI learning system enables practicing conversations with AI in real-life settings, helping students overcome the shyness barrier that some face after learning a language, boosting their confidence.

Currently, this feature is only available for English, Spanish, and French courses, but Duolingo states that Portuguese, Italian, and German versions will be available soon.

Practice makes perfect, and continuous practice can help master any challenging field. Just as the old adage goes, to Carnegie Hall, the answer is Practice, Practice, Practice. Duolingo utilizes artificial intelligence to help humans maintain the motivation to learn languages, making it one of the best educational applications in this wave of AI frenzy. AI as a teacher in educating humans in learning foreign languages makes language learning fun and enhances competitiveness in the workplace.