The rise of Google has changed many things in our world and our culture. One change that originally got a lot of press but has, as of late, died off, is the rise of the business model where value is created by giving something away.

Harvesting Attention to Create Value

Google gave away access to organized and findable information about anything and everything. This “gift” to the world of Internet users created the value of attention from semi-qualified potential customers, which Google then harvested and sold to the highest bidder.

This has been done before by radio and television, with the significant difference being one of degree of likely and consistent potential interest from the audience. Cable television and DVRs have disrupted the value equation for this industry but television still keeps keeping on and continuously evolving, albeit at a slower pace than Google.

The Free Model in Abstract Form

A new variation of the value created by giving something away has arisen with Duolingo, a new online tool that, when looked at through one lens, is a method for learning languages. When looked at a different way, it is a crowdsourced text translation platform. Duolingo was created, in part, by the serial entrepreneur who brought us the Game With a Purpose, Captcha and Re-Captcha. If you have not yet heard of Duolingo, get ready, because the sheer brilliance of the business model has revealed a path for a bunch of start-ups to imitate in abstract.

You may not know the Game with a Purpose by name, but it was one of the first examples of the gamification craze that has been sweeping the Internet for the last few years. It was created by Luis von Ahn, through his thesis at Carnegie Mellon, where he developed games played by humans that produce useful computation as a side effect. The first of these was the ESP game that both Google and Microsoft licensed to help in applying metatags to images. This model has been followed by Foldit, EteRNA and Phylo in the bio and life sciences arena and also by several others in linguistic, indexing and logic fields. For his revolutionary work, von Ahn received a host of accolades and awards, including the “genius grant” from the MacArthur Fellowship.

Everyone knows what Captcha is, but not everyone knows the difference between Captcha and reCAPTCHA. The technical differences aside, reCAPTCHA takes the textual input of people to ultimately digitize literature where optical character recognition (OCR) breaks down. ReCAPTCHA is given away as a free service in exchange for assistance in the decipherment of text that is currently unreadable by computers. Von Ahn calls this “Massive-scale online collaboration.”

Von Ahn has now brought this model to the people with Duolingo by giving language lessons away and harvesting the textual entry to translate all the content of the web into a myriad different languages. And Duolingo does this for free! No ads! No hidden fees! No subscriptions! Currently the site offers Spanish and German, but French, Italian and Chinese are in the works. Duolingo is still in beta and has a waiting list of 100,000 users. In less than a month, the site has translated more than 24,000 sentences and estimates that, with a user base on 1 million, it can translate all of Wikipedia to Spanish in 80 hours!

The underlying abstract equation is simple to understand:

  1. Find a problem that requires lots of tedious human attention.
  2. Find a perpendicular task at a very discrete level that will make progress against the problem.
  3. Find a way to make the task something that a lot of people will need to do as a reasonably required step (e.g., reCAPTCHA), or better yet, want to do, like learn a foreign language.

You Get What You, Or Someone Else, Will Pay For

I explained Duolingo to a friend of mine recently after she had told me she was planning to buy Rosetta Stone to learn French. She refused to believe it. In her view, there was no way that something for “free” could possibly be as good as something you pay for; i.e., There ain’t no such thing as a free lunch! Our world keeps turning upside down and old laws keep getting overturned.

It is becoming clear that axioms like “you get what you pay for” and “there ain’t no such thing as a free lunch,” do indeed have exceptions. The big exception, invented quite a while ago, but just beginning to really take off, is that you can sustainably give away things like entertainment, access to organized information and even personalized language instruction, just as long as you can create economic value through the act of giving it away.