Freedom House's annual report on freedom of the press around the world released on May 2 painted a mixed picture of Taiwan's media environment. The good? Taiwan remained one of only two countries in Asia (along with Japan) viewed as having a "free" press. The bad? The country continued its slide that began in the 2009 rankings.

In Freedom House's 2011 report, called "Freedom of the Press 2011: A Global Survey of Media Independence," Taiwan was ranked 48th in the world and 7th in the Asia-Pacific region in press freedom, confirming a continued decline from the 2008 rankings, when Taiwan placed 32nd and 4th, respectively.

In 2011 Taiwan earned a total score of 25 (on a 0-100 scale with 100 being the worst), reflecting an ongoing increase from 20 in 2008, to 23 in 2009 and 24 in 2010.

Tellingly, of the three main components comprising the total score – legal, political and economic environments – Taiwan has lost the most ground in the economic category, gaining one point each of the past three years.

The "economic environment" covers such factors as the structure of media ownership, the selective withholding of advertising or subsidies by the state or other actors. Freedom House cited similar factors in summarizing why local journalists felt press freedom has been backsliding in Taiwan the past year.

"A growing trend of marketing disguised as news reports, a proposed legal amendment that would limit descriptions of crime and violence in the media, and licensing obstacles all contributed to these concerns," the report said.

Already a problem raised in Freedom House's 2010 press freedom report, the practice of "embedded marketing" – buying advertising that masquerades as news, especially by the government – has taken a heavy toll, not only on Taiwan's Freedom House ranking, but on government and media credibility and morale within the profession.

The problem came into focus late last year, and nobody was immune. 

On Nov. 5, 2010, Taiwan's fiercely contested municipal election campaigns were entering their final stretch, but it was also the day before the curtain was to rise on the Taipei International Flora Exposition.

Following his normal routine, Mr. Chang started flipping through that day's Chinese-language China Times over breakfast. Its front page featured a colorful spread on the Flora Expo grounds, including a photo with a hundred models inviting readers to check out "related stories on pages A8 and A10."

The news headlines on page A8 read, "100 Beauties Show Off Flora Expo Dresses Outside Traditional Home" and "Traffic Controls in Place for Flora Expo, Stay Up to Date to Avoid Disappointment." A headline on page A10 read, "Flora Expo Pavilion of New Fashion, Far Eastern's Eco Ark Sets Sail."

Mr. Chang may not have known, however, that two of the four reporters whose names appeared in the bylines for the stories on the two pages were actually employed by the paper's advertising department. What they wrote was in fact advertising copy, paid for by the Flora Expo organizer – the Taipei City government – and presented as news.

This infiltration of advertising into news, called "embedded marketing," has actually grown dramatically in Taiwan in recent years.

Even President Ma Ying-jeou, when he was running for the presidency in 2008, felt compelled to pledge in his campaign literature that he would put an end to government use of embedded marketing. But in the heat of campaigns leading up to Taiwan's five major special municipality elections on Nov. 27, 2010, both of Taiwan's major parties turned a blind eye to this poison that undermines democracy.

Following the elections, a poll conducted by CommonWealth Magazine found that nearly one out of every four respondents (24.6 percent) believed the election news they saw "was nearly all embedded marketing." Nearly one-third (29.3 percent) said that of the election news they saw every day, "most of it was embedded marketing."

Real or Fake?

Local governments aren't the only ones guilty of paying for advertising posing as news.

A search of the China Times search engine reveals that the "reporter" surnamed Chou who wrote paid copy for the Taipei Flora Expo in early November also had bylines in 36 news reports over the preceding six months, covering not only local governments such as Taipei County and Hsinchu City, but also central government bodies such as the Research, Development and Evaluation Commission, the Judicial Yuan and the National Youth Commission.

After further checking, it turned out that Chou was not part of the China Times' editorial department but a supervisor in the advertising department's project planning division, responsible for drumming up business and selling ads. Chou's colleague in the division, a Miss Tsao, had written as many as 63 "news reports" in the previous half year.

China Times is anything but the exception.

NT$300,000 for a 'Special Report'

In the Taiwanese journalism industry, rumors have long circulated that the United Daily News sells space on its news pages to governments and companies at a set price. One former executive in the UDN Group pointed to the Economic Daily News, another of the group's newspaper, as being particularly engaged in the practice. According to the source, the main job of one of the paper's deputy editors-in-chief is to solicit "sales-oriented" news. This year his revenue target is set at NT$12 million. 

Another major daily, the Liberty Times, accepts government advertorials and notes in small print that the text is advertising copy.

On Nov. 13, over 10,000 people marched from eastern Taipei to the Presidential Office Building to oppose the planned Kuokuang petrochemical complex. The next day, a big headline on page A8 of the Liberty Times was clearly favorable to the march, reading "Protect Taiwan, Oppose Kuokuang Petrochemical Parade." But another article appearing on page A12 with a line in small print reading "Special Advertisement" carried the headline, "Taiwan's Industry to Face Ripple Effect if Kuokuang Petrochemical Goes Bye-bye." The angles of the articles on pages A8 and A12 were diametrically opposed.

Consistent with the impression most Taiwanese people have, the problem of embedded marketing is even more pronounced in TV news than in the print media.

In a CommonWealth Magazine survey, 63 percent of respondents said they believed the government spent money to buy television news, but those polled were less sensitive to paid placements in print media. Fewer than 10 percent believed that the scale at which newspapers engaged in the practice was very serious.

One TV news station worker contends that "factory-style" production processes have long been in place in Taiwan's TV news departments. Shaking his head, one senior TV news reporter says that orders for paid-for news stories appear every day on the station's news story assignment list, explicitly stating the topic, key points and key people that the news department must cover to support "sales requirements." Some TV news departments even have dedicated special project or "sales-oriented" reporters.

"I've been on the news desk a long time, and my main job has been to teach reporters how to make paid placements not look too much like paid news," says one senior media worker who used to work as a supervisor in a cable TV news station sympathetic to the "pan-blue" (pro-KMT) camp.

"Whether the TV station is blue or green (pro-DPP), to have a government official appear on the screen and be interviewed by a news anchor, you need to spend just over NT$100,000."

Liu Huei-ling, an assistant professor in National Taiwan University of the Arts' Graduate Institute of Arts Administration and Management, included in one of her papers a "price list" for embedded marketing options charged by TV stations in 2008. Liu, formerly a news producer at Taiwan's China Television Co., found that NT$150,000 to NT$300,000 could buy a "news interview" with a prominent TV news anchor, NT$250,000 to NT$300,000 could buy a "news forum," and NT$70,000 to NT$75,000 could buy a regular news item. There were also "buy one, get two free" deals, where a paid placement to be broadcast during peak viewing hours between 6 p.m. and 11 p.m. is also broadcast for free twice more during low-ratings time slots. The order in which the fake news stories are broadcast depends on the prices paid for them.

Society Fights Back

The abusive practice of selling "fake news" has become so egregious at Taiwan's major newspapers and cable and terrestrial TV stations that Taiwanese society has finally begun to take notice, leading to a spate of protests. One of them, the resignation of a veteran journalist, was highlighted in the Freedom House 2011 report on press freedom.

In December 2010, reporter Dennis Huang, a 16-year veteran of the China Times, expressed his dissatisfaction with the paper's sales of advertorials on his blog and announced he was leaving the company. His emotional article "Flying Away on a Jet Plane from the China Times" strongly resonated with other reporters, and in less than three weeks, it was viewed and forwarded by e-mail 150,000 times.

After he posted the piece, Huang was deluged by invitations to speak from over 40 groups, and more than 5,000 people signed a petition opposing embedded marketing, drawing interest and coverage from foreign media. Outlets ranging from Voice of America and Hong Kong-based Asiaweek and Phoenix TV to Beijing's Xinhua News Agency and China Youth Daily interviewed Huang or reported the issue. Taiwanese TV pundits of a "pro-green" persuasion feasted on the issue and perpetuated the criticism, but many mainstream media organizations decided to completely ignore Huang's appeal.

On December 26, 131 broadcasting school directors and professors signed a petition appealing for real news and opposing selling out to advertorials. The petitioners, representing 46 departments from prestigious schools such as National Taiwan University, National Chengchi University, National Taiwan Normal University and Shih Hsin University, all stood up to express their anger and demand that government agencies at all levels immediately put an end to embedded marketing practices.

In addition, Taiwan Media Watch quickly created a website that exposed how the government manages paid placements.

The reality is, however, that media regulators can no longer tolerate embedded marketing practices.

In late December, Taiwan's broadcasting regulator, the National Communications Commission, rescinded the license of ERA TV's variety channel for violating the Satellite Broadcasting Act by blurring the lines between advertising and programming, in effect shutting the station down. It was the first time since the NCC was founded in February 2006 that it had revoked the license of a television channel.

The day after the NCC made its decision concerning ERA TV, one NCC member stated that commission members often have differing opinions on many issues the body faces, "but yesterday, on the matter of punishing ERA TV's variety channel, there was an overwhelming consensus. Nobody had a diverging opinion."

Even earlier, in November, the Control Yuan, a government body empowered to investigate and censure the behavior of public officials and agencies, launched an investigation into embedded marketing by the government. Control Yuan member Wu Feng-shan, a media veteran who had served as president of the Independence Evening Post, censured the Mainland Affairs Council for permitting China's central and local governments to buy advertorials in Taiwan's newspapers to promote investment and tourism opportunities in China.

"Even me – I was a top student in a graduate school of journalism, but to be honest, even I can't tell the difference. What's the difference between this and real news? It looks exactly the same," an agitated Wu said pointing at an advertorial in a newspaper. "You ask me how serious the problem of government embedded marketing is? It's pervasive. It can be found everywhere."

Taxpayer Money Buying News

In fact, the use of paid placements has been around for a long time. Many media organizations have long had "business reporters" on their staffs responsible for providing "business services." But in recent years, the government began systematically using taxpayer funds to contract out advertorials through public tenders, dealing a far-reaching blow to social reality, government credibility and democracy.

The government took the lead in using paid placements beginning with the administration of former president Chen Shui-bian, but the practice has accelerated and been used more intensively under incumbent president Ma Ying-jeou, to the point of being institutionalized.

Packaged Contracts, Submissive Media

The Centers for Disease Control Taiwan's 2010 procurement plan for special newspaper reports on epidemic prevention is a case in point. The instructions explaining the NT$12 million open selection process clearly stipulated, "Reports and interviews must be written as news and laid out in the same format as rest of the page." Not only were the "special reports" required to fit the style of the news page, medical beat reporters had to write them and use their byline. In effect, actual reporters were being co-opted by the advertiser – the government – to write ad copy under false pretenses.

One veteran of the media advertising business who has dealt with the government for many years, says in exasperation that government departments that contract out advertorials have a number of strict requirements for their publication. They must appear in the news sections of Taiwan's three major papers and must carry reporter bylines. They have to appear in print the day after the interview and settled within three days. Otherwise, the government can deduct part of the payment.

"That's because government agencies have figured out they really can completely control the news," the advertising executive says.

That control is leveraged by all government agencies, central or local, blue or green.

One director of a major municipal government information agency boasted to CommonWealth Magazine that reports produced by media outlets with which he has good relations generally sing the praises of the government, because "the advertising budget is working. If you want big, you can produce big. If you want small, you can produce small. If you want the front page, you can get the front page." Standing behind the official's arrogance are the sizeable publicity budgets of county and city governments.

One media company manager strongly criticized the government's role. "The government should not take the lead in using tenders to force everybody to produce advertorials. It also should not use 'market forces' and 'liberalization' as excuses to stand by and ignore the problem."

President Ma claims to seek clean government, but he has given his own administration free rein to hand out red envelopes to buy the media, the media worker says. If the trend continues, he warns, the president's legacy will inevitably be connected to "red envelopes and corruption."

Government as Advertiser Leads to Blurring of Social Reality

According to the Nielsen Company's list of top advertisers in Taiwan in 2009, the top 10 governmental agencies spent a total of NT$1.44 billion on ads, 70 percent more than in the previous year, and the ROC government became the country's leading advertiser.

Although some government agencies bought actual ads, much of their budgets were devoted to advertorials. Instead of offering clarity, however, the practice has left administrations at all levels less sensitive to the factual reality of whether they are governing effectively or not.

There was one Saturday, for instance, when Wang Ju-hsuan, the head of the Council of Labor Affairs, was watching news on television and saw a story that praised the council's Bureau of Employment and Vocational Training. She immediately called the bureau chief to ask if the story was paid-for news.

"I've already gotten so confused that when television news praises me, I figure it's embedded news," Wang says.

The Ministry of Education has faced a similar predicament. Former education minister Cheng Jei-cheng once received a request from a radio station in southern Taiwan for an interview on legal amendments proposed to allow Chinese students to study in Taiwan.

He welcomed the idea, thinking he would have a chance to explain the government's policy on the controversial issue. But after thinking about it, he wondered why a radio station from the southern part of the country (which tends to be pro-independence and anti-China) would take the initiative to set up an interview. It was only when a colleague from the ministry's news division told him, "It's an embedded marketing project commissioned by the Mainland Affairs Council to help the government explain its cross-strait policy," that Cheng realized what was going on.

Interviews with central or local government leaders have emerged as the most popular form of embedded marketing. In a post on the "Green Citizens' Action Alliance" website at the end of 2008, National Chung Cheng University communications professor Lo Shih-hung complained that major newspaper interviews with the premier at the time, Liu Chao-shiuan, were all paid for.

So why does the government feel obligated to use embedded marketing?

Paying for coverage to allow senior officials to spout government propaganda has left the public skeptical of the legitimacy of interviews with politicians. The CommonWealth Magazine survey found that 53 percent of respondents believed "interviews with political figures" seen in the media were "advertorials." Over 70 percent felt that the government's use of advertorials to promote political propaganda or polish a politician's image would affect the objectivity and credibility of the news, and 67 percent said they would refuse to pay attention to these "paid news" items in the future.

Government information offices argue, however, that administration chiefs spend money on advertorials because "today's reporters don't write news about the government" or because "the media only report news that's critical of the government."

Yet one senior journalist describes the situation as a self-destructive cycle in which the government, the media and society are all losers: As the government continues to pay for fake news, the media are unwilling to provide free space for real news.

In addition, when one media outlet gets paid by the government to produce positive "news," rival media organizations that did not get a contract tend to retaliate by publishing negative news.

"It's no surprise that media outlets are not willing to interview senior officials, because positive explanations of policies are seen as advertisements. It's a vicious circle," says another news executive in explaining the self-destructive nature of the "paid placement" communications model.

Following in the footsteps of Taiwan's government, China's central and local governments, having figured out the rules of the game, are beginning to make use of the same model, spending even larger sums to buy space in the Taiwanese media to run propaganda favorable to China.

An Uncontrollable Flood of Chinese Money

"Today, Taiwan's TV stations are all in China vying for projects, and even vice presidents of sales have to get involved. When it comes to going after business, there's no differentiation between green vs. blue or unification vs. independence," says a television producer who has handled paid placements for Chinese customers.

The entities most aggressive in giving Taiwanese media contracts are Fujian Province television stations, and they often work with one Taiwanese media company to handle a package deal, placing advertorials with a number of Taiwanese print media or television stations.

The producer warned, however, that the Chinese TV stations are all headed by people with military backgrounds, while Taiwan's TV stations essentially chase money and lack strategic thinking. That volatile mix could have unpredictable consequences for Taiwan's future relations with China.

"The mainland basically doesn't need to use force to deal with Taiwan. All it has to do is buy it," contends another senior media worker.

Similar concerns were raised in the Freedom House report, which wrote of worries that media owners were whitewashing news about China to protect their own interests. It cited a specific column in the newspaper Want Daily that ran on June 4, 2010 to commemorate historical events on both sides of the Taiwan Strait but failed to mention the military crackdown on protesters in Beijing on that date in 1989.

"The China Times Group, the parent company of Want Daily, is owned by Tsai Eng-meng, a businessman with significant commercial interests in mainland China," the report said.

Drawing the Wrong Kind of Attention

In comments to CommonWealth Magazine, Sarah Cook, an Asia researcher at Freedom House, specifically pointed to the embedded marketing problem as the cause of Taiwan's declining press freedom ranking. The practice also garnered notice in the 2009 U.S. State Department's Human Rights Report on Taiwan.

Yet the Freedom House 2011 report, which primarily assessed conditions around the world in 2010, hinted that changes might be coming, and in fact, in January some first steps were taken to deal with the issue.

On Jan. 12, the Legislative Yuan amended the Budget Act to forbid the government from using taxpayer funds for paid placements. The government also issued an executive order requiring official policy explanations appearing in news outlets to be labeled as advertisements.

Two days later, Mainland Affairs Council vice chairman Liu Teh-shun said the amended Budget Act meant that Chinese entities would also be barred from engaging in embedded marketing in Taiwan.

Critics argued that the measures did not go far enough. But having drawn the wrong kind of attention from the international community on the issue, the government will be under pressure to deliver this year if it hopes to reverse the decline in its Freedom House ranking.

Strengthening democracy continues to be Taiwan's aspiration, and in its competition with China for attention in the international arena, Taiwan's biggest difference and major edge is its democratic foundation. But even the government is attempting to corrode the system with paid placements, turning the media, which should be a check and balance on the authorities, into a tool of deception.

News is tomorrow's history. But those meant to accurately record Taiwan's history are now being corrupted by the government's institutionalization of paid placements and perpetrating the greatest fraud in the country's history.

Translated from the Chinese by Luke Sabatier