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Subscription technology platform Zuora has acquired artificial intelligence firm Sub(x), the company announced today. According to CEO Tien Tzuo, this tie-up will enable Zuora to use AI to enhance its paywall offering.
The financial details of the transaction were not disclosed. Sub(x)’s 10-person staff will join Zuora as part of the deal, which is expected to close sometime between August and October.
“With Sub(x), every result is fed back into the learning system, which creates reinforcement learning,” Tzuo said. “This allows the paywall to continuously improve its performance, which we think will ultimately help strengthen the news industry.”
The acquisition is the latest example of how AI technology is reshaping the digital ecosystem. Zuora, which works with publisher clients including The New York Times, The Economist and The Financial Times, plans to use Sub(x) to make its paywall product more intelligent.
Publishers have increasingly come to rely on digital subscriptions as a key part of their monetization strategy, a response to the challenged state of digital advertising for the news media.
Enabling the paywall 3.0 era
Using Sub(x) technology, publishing companies will be able to paywall different users with different products at various times based on their likelihood to subscribe.
Unlike propensity models, however, which must be periodically adjusted, Sub(x) will constantly intake information about the efficacy of its past offers and recalibrate future offers accordingly.
As a result, the technology claims it will eliminate A/B testing, automating away the manual process of trial and error that paywall providers have historically used to improve their conversion rates over time.
By continuously ingesting past data and optimizing its strategy, Sub(x) aims to improve conversion rates, reduce churn and require less oversight. According to the company, this reinforcement learning strategy can reduce the time and costs associated with manual testing by up to 90%.
The breakthrough this technology enables could help usher in a new era of paywall strategy, which Tzuo calls paywall 3.0.
According to this logic, the first era of paywalls involved hard, universally applied gating to articles, while the second introduced propensity scoring that reacted to the likelihood of the user to subscribe.
