Twenty Years On from the End of the Newspaper Ban

The ban formally ended on January 1, 1988. But because the day fell during the holidays, it was not until January 4 that the government began accepting applications to set up new newspapers. That day, seven newspapers and one news agency went through the application process, a statistic that marked the depth of society's demand for news.

Media penetration rates/source: Nielsen ratings 1991-2006

Glory days

Before the ban was lifted, there were only 29 newspapers in Taiwan. Within a year, there were 98. Prospects were bright, and the industry experienced growth for many years thereafter.

However, this explosive growth introduced unprecedented competition. Led by the two largest newspapers, the United Daily News and the China Times, newspapers fought it out in all arenas, from advertising, to layout, to content.

The largest papers, such as the China Times, United Daily News, Central Daily News and Shin Sheng Daily News, increased their content following the lifting of the ban, moving from filling three sheets of broadsheet newsprint to six. This growth subsequently continued, so that newspapers today use ten or more sheets for a day's edition. The main reasons for these changes have been, on the one hand, to attract readers through richer content and, on the other, to draw in more advertisers. These actions caused great strain for newspapers that were financially weaker and unable to increase their page counts. The market tilted in favor of a few large players. At the same time, newspaper growth resulted in an explosive "information overload." Newspapers enhanced their content in a variety of ways, and with the passing of the authoritarian leaders and the flourishing of public discourse within a new spirit of democracy, began seeing themselves as political gatekeepers, gradually adding to the quality of Taiwanese culture and public dialogue. Newspapers began to be read by the elites, and not just by ordinary folks looking for the supplements or the next installment of a martial-arts serial.

Media penetration rates/source: Nielsen ratings 1991-2006

Cutthroat competition

Aside from enhancing content, the newspapers also introduced a variety of promotional strategies to snare readers and advertisers. In 1989, the China Times introduced its "Gold Giveaway" drawing. Other newspapers followed suit, leading to a giveaway war. Prize values skyrocketed. In 1994 the Liberty Times put on a giveaway linked to the stock market that totaled NT$500 million. The largest single gift, which caused a great stir, was a luxury villa valued at NT$30 million. The papers engaged in a variety of competitive tactics to raise circulation and expand their distribution channels, such as giving away large numbers of free subscriptions, simplifying the subscription process, and increasing payments to distributing retailers. But this strategy meant that for each copy of a paper sold at NT$10, newspaper publishers in fact received around NT$1.5, so that the more papers they sold, the more money they lost.

The newspapers vied to increase their advertising, their main revenue source. In the end, however, they even began to engage in self-destructive competitive tactics. The cost of a front-page ad was slashed from NT$500,000, to NT$150,000, to NT$70,000, almost to the point of being a total loss for the papers.

To please advertisers, so-called "industry reporters" began concocting "placement marketing" stories that blurred the line between advertising and news reporting, a practice that was much criticized.

Within a few years, the landscape changed. In 2003, the Hong Kong newspaper Apple Daily entered the Taiwanese market, using copious images, sensationalism, commercialism and gossip mongering to sweep the island. This made the traditional newspapers, which had prided themselves on their serious discussion of political and social issues and on the quality of their reporting, seem disconnected and aloof. Amid industry-wide upheaval, Apple Daily (current daily circulation 520,000) became Taiwan's second-largest newspaper, overtaking the struggling United Daily News and China Times, both of which are seen as favoring Taiwan's reunification with China. Only the nativist Liberty Times (circulation 720,000) is larger.

Vying for political news

Aside from industry-internal factors such as competition and the increasing popularity with readers of Apple-style news, the external realities of political wrangling caused the media's status as the "fourth estate," serving as a balanced public forum, to be questioned. With the polarization of Taiwanese politics into "green" (DPP-centered) and "blue" (KMT-centered) camps, a similar polarization began to come over the Taiwanese media.

Among the four largest newspapers, the United Daily News and Liberty Times show their political stripes most explicitly, respectively supporting the blue and green camps. The China Times ended up swinging between the two. Apply Daily, with its relative lack of political coverage, as well as a lack of political ties on the part of its Hong Kong owner Jimmy Lai, has remained outside the fray. Many readers, tired of the long years of political infighting, have gravitated towards Lai's paper.

An uncertain future

The industry has moved from the jubilation and profusion of new newspapers that greeted the lifting of the newspaper ban to the present dire state of the four largest papers. Newspapers face competition not only from each other but also from the forceful rise of new media. Things are looking serious.

In 1993, the government opened the market for electronic media. Cable television expanded rapidly, threatening the newspapers. This has been especially true of the trend towards satellite newsgathering, where live broadcasting has presented a formidable challenge to print media. The appearance of 24-hour news channels (of which there are currently eight) put the newspapers, which come out once a day at a set time, at a distinct disadvantage.

The rise of the Internet brought a further challenge to newspapers. Many people under 40 have never developed the habit of buying or reading newspapers, instead going directly online to search for the news that they prefer. As the older newspaper readership declines, younger readers are not replenishing their ranks.

When it comes to advertising, the Internet has posed an even greater challenge to newspapers. The newspapers' most profitable advertising categories, such as employment and real-estate ads, have been almost entirely replaced by more powerful online search engines. The China Times, which has held the commanding position when it comes to advertising, has seen a 70% drop in its ad revenues. With consumer trends pointing toward decentralization, personalization, and customization, newspaper advertising can hardly compete with online advertising, which is driven by user-generated keyword searches.

As readership and advertising decline, advertisers are naturally reluctant to spend their precious resources on newspapers. Ad revenues, which are the lifeblood of the papers, have declined. In addition, the key demographic in terms of advertisers and readers-middle-class males-has been shifting to China over the last decade, with Taiwanese businessmen and their families living there numbering around 1 million strong. The fall in society's overall spending power affects a variety of industries, and has been a direct cause of declining newspaper profits. Losses have amounted to hundreds of millions a year, leading to large-scale layoffs and downsizing over the last few years, with workers fearing for their job security. Major papers such as the China Times Express, Central Daily News, and Ming Sheng Daily have ceased publication in the last two years, signaling the arrival of a grim season for the industry.

Crisis or turning point?

To be sure, the rise of cable news and the Internet, as well as economic ups and downs, are challenges faced by newspapers all over the world. Aside from downsizing and implementing changes in their business model, newspapers have been diversifying their investments and building multimedia platforms. However, while European and American newspapers can look forward to at least limited profits, why have Taiwanese newspapers fallen into such dire straits? And how can they find a fundamental solution for what ails them?

Newspapers best stand for how the media can foster public opinion and discourse. To a certain extent, the newspapers' fortunes mirror the fortunes of a nation's democracy. Thus contemplated, the crisis that Taiwan's newspapers find themselves in, 20 years after the lifting of the newspaper ban, is a challenge not only for the industry, but for Taiwanese democracy. This is a point that we should all consider.