January 31st, 2007


You Want Innovation? Offer a Prize

Via Marginal Revolution


January 31, 2007
You Want Innovation? Offer a Prize

Besides the fact that both are considered great movies, “The Wizard of Oz” and “Silence of the Lambs” don’t have much in common. One is the story of a girl from Kansas who’s transported to a magical land where animals dance and sing, and the other is about a serial killer who eats his victims. You wouldn’t necessarily expect people to have similar reactions to the two movies.

But it turns out that, for whatever reason, they usually do. Those who love one tend to love the other, and those who think one is overrated generally think the other one is, too.

This odd little fact comes from an enormous database of movie ratings collected by Netflix, the online movie rental store. On its Web site, customers can give any movie 1 to 5 stars, and the company then uses these ratings — 1.6 billion of them — to find connections like the one between “Oz” and “Silence of the Lambs.”

The system, called Cinematch, allows Netflix’s Web site to bombard users with recommendations of movies they are likely to enjoy. Netflix executives hope Cinematch will give them a leg up as digital downloading allows dozens of other companies to sell movies over the Internet.

So on the Ides of March last year, Reed Hastings, the company’s chief executive, and three other executives were meeting at their Silicon Valley headquarters to talk about making the system better. They had just finished discussing one failed effort — a promising algorithm designed by a hotshot computer scientist from Stanford (since lured to Google) — when Mr. Hastings threw out an idea.

“We should run a prize,” he said, an open competition challenging people to come up with a better version of Cinematch.

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