Lobbies don’t change policy – structural weakness lessen potency

Interest groups tend to be fragile, because they are coalitions of smaller groups whose interests sometimes coincide and sometimes diverge. This has two important effects. First, entities excluded from the coalition, or ones who leave it, can often block legislative change, including by nonlegislative means. Recall that in the run up to the Audio Home Recording Act, songwriters and music publishers were initially excluded from negotiations between equipment manufacturers and the record labels. They responded by suing to block introduction of the technology that was the subject of these discussions: the DAT recorder. The lesson that thesongwriters and publishers taught the labels is that no industry is an island: every group reveals itself, fractal-like, to be comprised of a set of subgroups with their own agendas. This creates a definitional problem for theories of public choice and interest group lobbying: determining what constitutes a “group” is a fraught process.

The AHRA also demonstrates the Goldilocks problem that any putative set of interests faces ex ante: to maximize lobbying power and minimize political opposition, the group or coalition must be broad enough to prevent objections or defections from fellow travelers, but narrow enough that its proposal is not vitiated or defeated altogether by other, less related interests. The music industry’s initial unmitigated opposition to the DAT failed because its coalition was too narrow—it excluded some standard music interests in writers and publishers. Broadening this grouping by bringing these other parties inside the tent (literally, in the case of Sony’s purchase ofCBS Records) weakened the force of the resulting legislation but enabled it to be enacted. And the AHRA ultimately failed in part because the music industry had to appease the nascent but rising personal computer industry. Hardware and software firms lobbied successfully to have PCs, software, hard drives, and the like excluded from the AHRA’s regulatory aegis.425 When computers began to supplant specialized home stereo equipment, the AHRA rapidly became a dead letter..426

The second effect of interest group fragility is on the legislative output of lobbying: the customized IP regime needs to be broad enough to advance the shared goals of the group’s members but narrow enough to avoid issues that could fracture the alliance and draw opposition from outsiders. The SCPA had to permit copying of chip designs via reverse-engineering to overcome opposition from semiconductor firms that played a “second source” role. The AHRA had to adopt a royalty system that would increase the cost of DAT technology, making it less attractive, to obtain assent from songwriters and music publishers. And the VHDPA had to largely immunize distributors of infringing vessels from liability to keep them inside the political tent with manufacturers. Each legislative compromise was politically necessary, but each came at a cost in efficacy.

Interest groups are thus caught between the Scylla of political disintegration and the Charybdis of ineffective reform.427 Navigating that course is exceptionally challenging.