The NYT recently published an article, “Netflix Competitors Learn the Power of Teamwork” by Steve Lohr, discussing the prize offered by Netflix for improving upon the algorithm it currently uses for recommending movies to Netflix customers and what came from the contest:

A contest set up by Netflix, which offered a $1 million prize to anyone who could significantly improve its movie recommendation system, ended on Sunday with two teams in a virtual dead heat, and no winner to be declared until September.

But the contest, which began in October 2006, has already produced an impressive legacy. It has shaped careers, spawned at least one start-up company and inspired research papers. It has also changed conventional wisdom about the best way to build the automated systems that increasingly help people make online choices about movies, books, clothing, restaurants, news and other goods and services…

The biggest lesson learned, according to members of the two top teams, was the power of collaboration. It was not a single insight, algorithm or concept that allowed both teams to surpass the goal Netflix … set ... Instead, they say, the formula for success was to bring together people with complementary skills and combine different methods of problem-solving.

Other Prizes

Prizes have been used in the past to induce such discoveries as

The Black Tulip: Sometime around 1672, the city of Haarlem in The Netherlands set a prize of 100,000 guilders to the person who can grow a black tulip.

The Longitude Prize: A reward was offered by the British government through an Act of Parliament in 1714 for a simple and practical method for the precise determination of a ship's longitude. The prize was administered by the Board of Longitude... The main longitude prizes were:

₤10,000 for a method that could determine longitude within 60 nautical miles (111 km)
₤15,000 for a method that could determine longitude within 40 nautical miles (74 km)
₤20,000 for a method that could determine longitude within 30 nautical miles (56 km).

Napoleon’s Prize for Preserved Food: In 1795, the French government offered a prize of 12,000 francs for a method of preserving food for use by the army and navy. Chef Nicolas Appert began experimenting in his workshop at Massy, near Paris, and in 1810 was awarded the prize for his method of packing food in bottles, corking them and submerging them in boiling water to stop spoilage.

The Orteig Prize: In 1919 Raymond Orteig offered a prize of $25,000 for the first nonstop aircraft flight between New York and Paris … At 7.52 AM, May 20th, 1927 a small single-engine aircraft took off from Roosevelt Field, Long Island. 33 ½ hours later, on May 21st, the same aircraft landed at Le Bourget Airport, Paris. At the controls of the Ryan monoplace named Spirit of St Louis, a 25-year-old mail pilot, Captain Charles Lindbergh.

The Ansari X Prize: On October 4, 2004, famed aerospace designer Burt Rutan and financier Paul Allen won $10 million for leading the first private team to build and launch a spacecraft capable of carrying three people to 100 kilometers above the earth's surface, twice within two weeks.