The Netflix Prize: 300 Days Later
whimsley.typepad.com
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Beyond that I think he missed the really interesting ideas behind the recommender system possibilities. Once a user has enough ratings on movies and there is enough of a cross section of other users rating the same movies the math of the problem starts to create a profile of the user. With that profile it is more likely to be able to find the things the user will find interesting instead of just what the crowd voted most popular.
The real trick is not to use some artificial error measuring method to validate how your algorithm is working but instead to focus on how the recommendation system changes the way the user interacts with your website.
The Netflix prize did a few things that where wonderful for the process of recommendation system, they brought a lot of attention to the field and they gave a huge dataset for people to compare their results with. In the long run, even if no one wins the grand prize, they will have give much more to the field of study then the $1 million.
Oh yeah .. and maybe this January there will be one more YC start-up doing recommendation systems.
Also it makes a lot of sense to integrate the other data you have about your items (genre, director). It is actually pretty easy to do.
While algorithms for predicting your upcoming ratings based on your previous ratings may not be able to improve...surely there are some creative ways to re-think the entire system:
Two obvious approaches would be to rate on multiple scales (funniness, intellectual weight, 'light'-ness, etc.), and to include a comment-tracking system alongside the simple rating system to provide a better more complex picture of the film (as Reddit, and YCnews do).