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  A good deal of technology thereby comes from military spending. And with developments tied to how much money goes into research, the pace of innovation looks set to increase. In 2008 the world’s combined militaries spent an astonishing $1.4 trillion, or about 2.4 percent of global gross domestic product. That amount, up 45 percent since 1999, was a new record. For the most part, this is an American story, as nearly two-thirds of the increase came from the United States.7 American military spending increased 10 percent in 2008 to $607 billion, or 42 percent of the global total, seven times more than second-placed China, with a relatively paltry $84.9 billion.8

  The United States spends so much on its military that the Pentagon’s secret “black budget” of $50 billion is more than the entire defence budget of most countries, including the United Kingdom, France and Japan, and more than triple Canada’s.9 Much of this money flows to DARPA, universities and national labs such as Livermore. By one estimate, as many as a third of major university research faculty have been supported by national security agencies since 1945.10 No wonder the United States produces a disproportionate amount of the world’s science and technology: despite having only 4 percent of the world’s population, the country spends about half the world’s research and development dollars.11 It has also made technology part of the cultural fabric. As a U.S. Army report states, “Technology is part of how Americans see themselves, to reach for it is instinctive.”12

  Some military inventions have been commercialized in obvious ways; the atomic bomb, for one, was turned into nuclear energy, while jet fighters became jetliners. This book will feature many less obvious spinoffs, like how radar led to the microwave oven or spy satellites spawned Google Earth. The important thing is that the technologies eventually came to market. “The whole history of Silicon Valley is tied up pretty closely with the military. Integrated circuits were designed to guide warheads. All the constraints that were necessary to make that successful drove a lot of the miniaturization to work,” says John Hanke, who helped create Google Earth. The military is “willing to pay millions of dollars per user to make it possible. Things have this very high value that you don’t necessarily see in the consumer space. Once the technology and the basic R&D is paid for, then companies start looking for those secondary markets where you can take the things they know how to do.”13

  We’ve come to the point where it’s almost impossible to separate any American-created technology from the American military. Chances are, the military has had a hand in it, and industry has been a willing partner. In the case of Livermore’s collision-modelling software, car companies have been working with the lab since the 1980s to refine the tool. The carmakers and the lab swap software code back and forth in an effort to make it better. “There’s give and go in both directions,” says Ed Zywicz, one of Livermore’s programmers.14 James Braden, the Marine colonel, says the military’s relationship with industry has never been as good as it is today. “As you improve a ground combat vehicle, some of that spins off into the automotive industry and on the flip side of that, many of the things the automotive industry comes up with spin off into our ground combat vehicles,” he says.

  War also drives economic activity, a truth that governments have always known. The Second World War, for example, ended the Great Depression by stimulating demand for everything from shoes to steel to submarines. In 1933 a quarter of the American workforce was unemployed and the stock market had lost 90 percent of its value since the crash of four years earlier.15 President Franklin D. Roosevelt’s New Deal, a package of social reforms, steered the economy in the right direction, but the crisis was still in full flow when war broke out. The United States saw steady economic recovery, first as it supplied its allies and then when it formally joined the war in 1941. The entire might of American industry moved to support the war effort and the nation reaped the benefits. In 1944, when defence spending reached an astounding 86 percent of the federal budget, gross national product climbed a correspondingly huge 28 percent. In dollar terms, GNP went from $88.6 billion in 1939 to $135 billion in 1944. These are growth rates that economists and stock investors see only in their dreams.

  The benefits went beyond mere numbers. By 1944 unemployment had dropped to 1.2 percent of the population— it has never again been that low—and even those people who couldn’t normally find jobs, including many women and African-Americans, were gainfully employed. The contributions of those particular demographics during the war also did much to further their respective rights movements in the years that followed.

  History looks to be repeating itself since the “war on terror” began in 2001. American defence spending has shot up 74 percent to $515 billion since 2002. Gross domestic product saw a correspondingly solid rise of 2.9 percent on average between 2001 and 2008, before the global recession set in. In 2007 unemployment was among the lowest it has ever been. The United Kingdom, a major ally in the war on terror, experienced similar benefits. GDP grew an average 2.3 percent while unemployment hit its lowest point in more than two decades in 2007. This growth was not coincidental. As of early 2009, the war on terror had cost the United States more than $850 billion—but much of that taxpayer money didn’t just evaporate, it went right back into the industries that did the heavy lifting.16

  Trying Out New Positions

  The pornography industry spends money on technology too, though it generally doesn’t create it: there are no labs with scientists in white coats working on better porn innovations. Instead, the industry exerts its influence as an early adopter. Porn dollars often make it possible for technology-creating companies to stay afloat and improve their innovations to the point where they’re ready for a mainstream audience. Just ask Brad Casemore, the product manager for a small Toronto-based company called Spatial View. In 2009 the company introduced software that allows iPhone owners to view 3-D photos and videos. A porn company, Pink Visual, was one of the first to license the technology and produce content with it. “The people in the industry feel a great sense of urgency to stay ahead of their competitors and, no pun intended, they have a really demanding audience,” Casemore says. “It’s an audience that’s continually looking for new ways to access content.”17

  Having been at the forefront of the industry since its first issue in 1974, Hustler has seen more technological change than just about anyone in porn. Michael Klein, president of Larry Flynt Publications (which publishes Hustler), agrees with Casemore’s assessment. Porn companies have to be on top of the latest technology because they are in an extremely competitive industry. If they’re too slow in getting their content to people, somebody else will beat them to it. “You need to be out there and get the product out as quickly as you can to consumers,” he says.18

  Porn companies are able to adopt new technologies quickly because they are usually small and, like the actors they hire, quite flexible. Tera Patrick, one of the industry’s biggest stars, started her own company, Teravision, in 2003, with then-husband Evan Seinfeld, bassist and singer with the heavy metal–hardcore band Biohazard. The couple says porn companies can experiment with technology because they don’t have to go through layers of management. “The mainstream is slow on the go. They need a hundred people to make a decision. In a corporate structure, people are afraid to go out on a limb because if something goes wrong, they could lose their jobs,” Seinfeld says. “In adult entertainment, if you came to Tera and myself and said, ‘Hey, I’ve got this new technology to deliver your content to people via an iPhone,’ we could run a check on your company in a matter of days, have a contract and be up and running within a week.” Patrick agrees: “If somebody pitches me something, we can move at light speed. In some cases the early bird does get the worm.”19

  Even the bigger porn companies like LFP and Playboy Enterprises don’t feel hemmed in by their corporate responsibilities and behave like entrepreneurs. If a mainstream movie studio wants to try something new, Klein says, “they have to go back and get Tom Cruise’s permission or Tom Hanks’s
permission, the director’s permission, the writer’s permission. We secure all those rights and we control the movies we have when we do the deal so it’s easier for us to try all these things.” The result is that there are thousands of privately owned entrepreneurial porn companies with lots of money to burn. As porn star Stoya points out, they can afford to say, “Yeah, let’s give it a shot—if it doesn’t turn out, it’s no big deal.”20

  This flexibility attracts non-traditional entrepreneurs who have trouble fitting into the mainstream. Scott Coffman, a serial entrepreneur who had tried to create, among other things, board games and herbal supplements, saw potential in video-ondemand because of the way people were pumping quarters into peep-show booths in adult video stores. He started the Adult Entertainment Broadcasting Network, a website where visitors can pay to watch porn on a per-minute basis, to try out the peep-show concept online. AEBN, Coffman says, now pulls in a hundred million dollars in revenue a year, making it the largest video-on-demand provider in the world, in or out of porn. “I thought that’s the way we should be selling adult entertainment online, because guys only want to come and watch for a short amount of time. We saw the potential when most companies didn’t really care about it,” Coffman says. “We showed that you could make money on the internet with video. We didn’t just show the way in technology, but also in economics.”21

  After graduating from the University of Southern California’s prestigious film school, Ali Joone started Digital Playground in 1993. In 1997 he bet the company on an emerging home-video technology, DVD, a move that mainstream producers were reluctant to make in light of such previous flops as laser disc and CD-ROM. “Everybody in the industry thought DVD was a fad, mainly because CD-ROM came and went. I never looked at CD-ROM as the final product because the image was small. But when you looked at DVD, the image quality was great and it was a big leap from VHS,” he says. “The mainstream waits until there’s a number of players out there.”22 Porn is also a medium that allows for unparalleled freedom and creativity, Joone says. “Adult is the last place where you can do independent filmmaking. You can make any movie you want as long as it has sex in it. As a creative person, your boundaries are huge.”

  During the course of researching this book, I was surprised to learn that Paul Benoit, a former high-school mate of mine, was the chief operating officer for the company that produces the popular porn site Twistys. I never pictured him as a porn executive, but as he explains, he was attracted by the marketing opportunities and creative freedom. “What’s always fascinated me about the industry isn’t the breasts or the sex, but how willing it is to push the envelope,” he says. “Being in the industry means doing whatever our imaginations can generate.”23

  Porn companies are forced to innovate, Benoit says, because they are one of the most stigmatized, marginalized and even hated industries there is. As such, they face limitations, regulations and prosecution at every step. Credit card firms, for example, charge them larger transaction fees because they run a higher risk of customers wanting their money back (people don’t tend to think transactions through when they’re sexually aroused, which often results in buyer’s regret). A growing number of countries are also looking into ways of outright blocking pornography online—and not just the violent and disturbing stuff, but simple nudity as well. One filter tested by the Chinese government even blocked pictures of pigs, which were mistaken for naked human flesh. And this isn’t happening only in developing or devoutly religious countries like China and India, but in countries with supposedly strong free-speech laws such as Australia and the United Kingdom.

  For porn companies, necessity really is the mother of invention. They have to get to new technologies quickly and exploit them for as long as they can, until regulators catch up. Then it’s on to the next technology. “To deliver, you have to invent in order to circumvent other issues that may come up,” Benoit says.

  Decades of technological innovation and virtually unlimited demand have given the industry a veritable licence to print money. Many producers have resisted going public because of the red tape, including responsibilities to management and shareholders, that inevitably follows. As with traditional businesses, many believe that once shareholders enter the equation, the ability to push boundaries lessens. Non-transparent private companies are also better at hiding information, such as how much money they’re generating, which helps them fly beneath the radar of authorities and tax collectors.

  All of this explains why there are only a handful of publicly traded companies that deal in sexual content, including Chicagobased Playboy, Colorado-based New Frontier Media, Barcelonabased Private Media and Germany’s Beate Uhse. Playboy and Beate Uhse are the biggest, each bringing in around $300 million in revenue a year. There are many big independently owned companies that reportedly pull in hundreds of millions in revenue each, including a pair of Japanese firms, Soft on Demand and Hotuku, London-based Dennis Publishing and a host of American companies, including Digital Playground, AEBN, Vivid and Wicked Pictures.24 Aside from the big boys, there are thousands of smaller companies such as Twistys and Teravision. Accurate numbers are difficult to come by because of the industry’s lack of transparency, and because, as technology historian Jonathan Coopersmith puts it, “everyone lies.”25

  The estimates that do exist are jaw-dropping. The worldwide porn market has been pegged at a whopping $97 billion, or more than the combined revenue of some of the biggest internet companies, including Google, Apple, Amazon, eBay and Yahoo. China, South Korea and Japan are the top three porn revenue generators, although in the case of China the numbers are likely skewed toward the manufacture of goods like DVDs and sex toys rather than consumption, given the country’s strict antipornography rules. The United States rates fourth with an estimated $13 billion spent, followed by Australia and the United Kingdom with about $2 billion each. That worldwide revenue amounts to $3,075 being spent on porn every second, $89 of which is on the internet.

  While the United States only places a technical fourth in estimated revenue (though its $13 billion still exceeds the combined revenue of the three biggest television networks, ABC, CBS and NBC, and is close to the total intake of the NFL, NBA and MLB), porn innovation, like military innovation, is still very much an American story. American producers have led every medium shift, from film to videotape to DVD to the internet, where 89 percent of adult websites originate in the United States. The rest of the world doesn’t even come close; Germany is second with 4 percent of porn sites, followed by the United Kingdom with 3 percent. Asian countries make up a mere sliver of the total porn-site pie.26 While pornography is a global market, the worldwide industry looks to American producers to find out what’s next.

  Keeping Up with the McDonald’ses

  The motivation behind innovation in food technology is simple: as the world’s biggest industry, the stakes in food are huge and the competition is fierce. Producers must cater to customers’ tastes, even if they are unreasonable, which is more the case in the food industry than in perhaps any other. We want burgers and fries, but we also want them to be healthy. We want fresh produce year-round, even in the dead of winter. We want food immediately because time is our most precious commodity. We also want our food cheap so that we can spend our money on “more important” things, like new cars and flat-screen TVs. All of this requires technological innovation. For producers, catering to these needs is not easy, but the smallest changes can provide big rewards. Huge differences in profit can often be measured in seconds. If a fast-food restaurant can shave a few seconds off serving a burger and then sell millions of burgers, the technology that will help it do that is well worth the investment.

  Historically, stabilizing a population’s food supply has meant improving agricultural methods, harvesting tools, equipment, transportation and infrastructure, all of which inevitably involve technology. The Green Revolution, which swept the world in the fifties and sixties, applied agricultural innovations such as hybrid seeds, chem
ical fertilizers, pesticides and irrigation methods. Norman Borlaug, the American scientist known as the father of the Green Revolution, was fond of pointing out how integral those technologies were to prosperity. “Civilization as it is known today could not have evolved, nor can it survive, without an adequate food supply,” he said during his Nobel Peace Prize acceptance speech in 1970.

  After stability, the impetus for innovation becomes portability and export, and it’s here that the military ties have typically come in. During the Second World War, the American government spurred massive investment in new preservation techniques such as spray-drying and dehydration. These new technologies were needed to make foods last longer and withstand the rigours of travelling thousands of kilometres across the ocean, to be consumed by soldiers. The investments paid off, resulting in what food historians have called the bestfed troops in history. While the average American male civilian ate 125 pounds of meat in 1942, a typical soldier was allotted 360 pounds. Some troops were getting as much as eleven pounds of food per day while civilians made do with four.27

  When the war ended, the United States emerged as a food power with a huge advantage over the rest of the world. By 1946 the country was established as a major exporter, producing 10 percent of the world’s food.28 Its position as the first country to achieve political, economic and agricultural stability was strengthened by the fact that Europe had just seen much of its infrastructure destroyed, and by coincidental large-scale crop failures in Asia. In 1946, while Americans wallowed in the luxury of too much food, more than 600,000 Chinese died of starvation and 125 million Europeans faced malnutrition.29 Today, the United States is the largest exporter of food and livestock, with nearly double the output of the next country on the list, France, followed by Germany, the Netherlands, China, Spain, Belgium and Canada (it’s no coincidence that the top three food exporters in the world are G8 countries).30 The American food system has, in fact, created so much abundance that it wastes more food than many nations produce. Americans spend half a trillion dollars every year at supermarkets and another half a trillion at restaurants, half of that at fast-food outlets. They also end up throwing away half of the food that is ready for harvest.31