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NEW YORK (TheStreet) -- The lure of the Rosetta Stone  (RST) - Get Free Report used to be impossible to resist.

Language learners were once eager to fork over $500 for a stack of the company's CD-Roms, confident that one of the world's leading providers of language-learning and literacy solutions would carry them to Italy, Argentina or China with all the tools to make friends and build fortunes.

But those days are long gone.

Faced with a far more crowded language-learning market and a late-entry into mobile apps, shares of Rosetta Stone have tumbled 65% over the last five years. The Arlington, Va.-based tech company has struggled to get consumers to pay for similar language courses available through apps that cost far less. Shares ending trading on Thursday at $9.45.

Though Rosetta Stone markets its products as top-of-the-line, the company's declining revenue is a testament to remaking the company's need to find a new business model for a younger generation's Internet. Revenue in the first quarter fell 5% to $61 million.

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While Rosetta Stone is the only publicly-traded language learning software, it isn't the only learning software company suffering from a downgrade in share price.

K12 (LRN) - Get Free Report, a technology-based education company that provides an online curriculum for Kindergarten to 12th grade students, has seen its shares fall 3.5% over the last 12 months. Scientific Learning Corporation (SCIL) has dropped 78% in the past year.

Rosetta Stone offers courses in 30 different languages through a subscription model. Consumers now pay $180 to $400 for online subscriptions or software downloads, price reductions that took place this year. Unlike in the 1990s, competition is coming from other subscription-based products such as Fluenz, Living Language, Babbel and Mango, all privately-held companies.

Some, such as Babbel, offer services starting at $6 per month, much lower than Rosetta Stone's entry level option of $170 for six months. But Rosetta Stone's price reductions may be a case of too little too late, said Robert Furlong, an analyst at GARP Research and Securities.

"They were stubborn about their premium product and premium pricing," Furlong said in a phone interview. "You could see the world changing to free or at least cheaper alternatives. They were really stubborn and really late to change that."

In 2012, the company resorted to major restructuring, appointing its finance chief, Stephen Swad, 52, as CEO. Rosetta Stone then trimmed its marketing budget, closed all U.S. in-store kiosks and moved operations online to focus on subscriptions and mobile applications. All of these attempts were made to slow its falling revenue. 

To expand further into learning software, Swad led Rosetta Stone to acquire four software companies including Tell Me More for $28 million and Livemocha for $8.5 million. Swad also expanded into education technology through the purchase of reading software company Lexia Learning for $22 million and Vivity Labs, a brain training technology, for $12 million.

Jonathan Mudd, head of global communications for Rosetta Stone, said the company's strategy is to grow revenue through new mobile applications.

"We place a real emphasis on mobile learning across all of our products, and are developing apps for both iOS and Android ecosystems in our effort to engage learners all over the world," Mudd wrote in an email.

Rosetta Stone released its first mobile app in 2011 called Rosetta Course, and followed that up with an app for iOS and Google (GOOG) - Get Free Report called Rosetta Stone Portuguese Futebol Edition in June. The company released the app targeting travelers heading to the FIFA World Cup this month. The special edition is the fifth such app released as a part of the company's Travel series after French, Spanish, German and Italian.

Despite its restructuring and efforts to offer new products, the language-learning provider is discovering that some of its rivals offer free online language learning tools as an alternative to the company's subscription-based business model.

Duolingo, a free language learning software, is not only cheaper, but better, said Furlong. With 30 million online users compared to Rosetta Stone's 100,000 paid subscribers, it's also larger. Launched in 2011, Duolingo is a free language-learning program and a crowd-sourced text translation platform. This dual design transcribes websites that clients uploaded to Duolingo. The documents are translated by students as the users practice the learned language.

Given steep competition from free sites with lower costs like Duolingo, Furlong said Rosetta Stone may have waited too long to move to mobile apps to revive the company. "They're late and it's not going to change now," said Furlong. "Five years ago that's where you went. If you wanted to learn a new language you thought of the yellow box.

"But I think it's too late for them now,'' he said. "It is too late to change."

-Written by Kathryn Mykleseth in New York.