Subscription Platform Zuora to Acquire Zephr in $44 Million Deal

The subscription management platform Zuora has reached an agreement to acquire Zephr, a company that provides personalized paywall software to publishers, for $44 million in an all-cash deal, Adweek has learned. The deal is expected to close in early September. The purchase agreement includes an additional $6 million in earnout considerations if Zephr can reach certain financial objectives, according to Zuora chief executive and founder Tien Tzuo. In March, Zuora raised $400 million in capital from investment firm Silver Lake to finance its continued expansion into the subscription economy. The acquisition will strengthen the technical capabilities of Zuora, an early pioneer of the digital subscription industry as more publishers embrace paywalls as a means of generating reader revenue. Zephr, which launched in 2017, has developed a sophisticated paywall technology that tailors the meter limit and its proposed call to action based on individual user behavior. Often called a dynamic paywall, the software aims to improve conversion and retention rates by assessing where a consumer is in their subscriber lifecycle and personalizing its offering to match their needs at the time. How The Washington Post Is Using Data Journalism to Drive Subscriptions "Zephr helps deliver personalized experiences for every subscriber, and combined with Zuora will provide a full solution to build, nurture and monetize subscriber relationships in the media industry and beyond," Tzuo said. The acquisition comes as the digital subscription ecosystem grows both more saturated and more complex. Publishers have embraced paywalls as a means of diversifying their revenue stream. As more companies vie for fixed consumer budgets, the value of technologies that increase conversion and retention rates could continue to rise. Beyond the media industry Zephr has focused its commercial efforts on serving publishers, and it counts clients such as News Corp., Tribune Publishing and Adweek. Zuora works with publishers as well, including Future Publishing and the Penske Media Company, but it also supports subscription businesses outside of the media ecosystem, including the automotive and banking industries. It’s clear that the winners are constantly experimenting and connecting new services, bundles and offerings, to the right subscribers at the right time.—Tien Tzuo, founder and CEO, Zuora "Zuora wants to enable their customers to monetize and nurture their subscriber relationships," said Zephr chief executive James Henderson. "By personalizing the experience for every user we nurture, we put the two together and it creates a unique set of capabilities for the market." Zephr will be a business unit inside of Zuora through the end of the year, and Zuora aims to fully integrate it by early next year, according to Tzuo. The combined headcount of the two companies will be roughly 1,500 people. Zuora has no plans to implement broad layoffs, though it will eliminate any roles made redundant by the merger. New chapter of the subscription economy The early days of digital subscription technology treated paywalls as a blunt instrument, typically limiting the number of articles a reader could consume based on volume. As the subscription economy has matured, so has the technology powering it. Now, dynamic meters take into consideration a variety of factors before extending a call to action, such as a registration wall, newsletter sign-up or paywall. For example, the technology could assess whether a reader has visited the website before, what domain they came from, what article they landed on and how long they lingered, then use these insights to inform the prompt it serves. The more often a reader visits, the more data the software ingests and the more intelligent its recommendations become. "What's happening in the media and publishing industries is a good bellwether for where the subscription economy is going," Tzuo said, adding, "If you look at some of the most successful companies in the industry, like Disney, who is now outpacing Netflix in subscriber growth, or The New York Times, speeding past its subscriber growth plans, it's clear that the winners are constantly experimenting and connecting new services, bundles and offerings, to the right subscribers at the right time."

Merger & Acquisition News

Subscription Platform Zuora to Acquire Zephr in $44 Million Deal

Zephr will bring its dynamic paywall technology to the subscriptions company

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Mark Stenberg

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