How Free Services Make Google Rich

Obviously, the big news from Google (Nasdaq: GOOG  ) yesterday was the official announcement of the Chrome OS operating system, which should raise a few red flags for Microsoft (Nasdaq: MSFT  ) . But while that event is hogging the spotlight, Google also introduced another example of how one Google project leads to another -- and eventually to more online traffic and ad revenue.

The back story
Google's YouTube video sharing service added a closed-captions feature last year in an effort to make videos more valuable. A video with captions makes a lot more sense to a hearing-impaired user, of course, but there are many other reasons to support text in videos as well. And this week, YouTube became better in many ways -- all thanks to obscure Google projects that seem to have nothing to do with videos.

I've heard that some people might watch YouTube videos at work (but of course I wouldn't have any firsthand experience of that). The Apple (Nasdaq: AAPL  ) iPhone can't play YouTube's videos directly because they are presented in the Flash format from Adobe Systems (Nasdaq: ADBE  ) , which the iPhone can't handle -- but there's an app for getting around that problem. I'd imagine that a student or two in a packed college auditorium could sneak in a few YouTube videos in the course of a long, boring lecture on economics or calculus. In short, some people like to watch videos with the sound turned off.

Other times, text just helps you understand better what people are saying. I'll fully admit to watching TV on a daily basis with the captions turned on, especially when faced with odd accents or the kind of dialogue where every word counts. And here's the kicker: When you convert spoken-word material into text, suddenly you can make it searchable, quotable, and translatable. And that makes better citizens in Google-land.

The news
So Google is making it faster and easier to add captions to a video by incorporating automatic transcription into the process. It's the same speech-to-text algorithm that's used by Google Voice to create transcripts of voice mails. In turn, the whole shebang was originally trained with data from the 1-800-GOOG-411 directory assistance service.

The auto-captioning service will start small, with a handful of partners who specialize in lectures and instruction videos, including Yale, UCLA, PBS, and official channels of content produced by Google or YouTube staff. I expect to see a wide rollout in coming months when a few bugs and quirks have been worked out of the system. The idea is to eventually have captions on every video that needs them, and these auto-captioning tools simplify the process. As a corollary, the act of processing and then error-checking this first batch of videos should improve the quality of the transcription algorithms, which will make GOOG-411 and the voice mail features more useful as well.

The reasons why
And that is why Google keeps rolling out small, specialized services that seem to make no sense: They add up to a framework of tools that can be tied together into a greater lattice of goodness. If you're a tech geek like me, you might recognize this philosophy as a basic tenet of Unix operating systems, where a handful of super-specialized tools can be chained together in a script or command line to do amazing things. Google is a master of algorithm magic like this in a way that Microsoft and Yahoo! (Nasdaq: YHOO  ) have never been able to seriously challenge. That includes you, Bing.

So Google hands out 411 information for free, which must be a huge thorn in the sides of AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) , among others. Does Google make money from that service? No. But the information gathered there improves several other services. Some of them do make money -- and I believe that YouTube is one of them by now -- so anything that draws people further into the Google experience is good for Google's top and bottom lines.

A happy Google user surfs the Web more. Increased surfing means more ad clicks. And that's the real payoff. Google is the biggest Rule Breaker I've seen -- in more than just market cap.

Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. Observing the three cardinal virtues of the system administrator (laziness, impatience, and hubris), Anders hopes to one day replace himself with a small Unix shell script. Google is a Motley Fool Rule Breakers recommendation. Apple and Adobe Systems are Motley Fool Stock Advisor picks. Motley Fool Options has recommended a diagonal call on Microsoft. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


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  • Report this Comment On November 20, 2009, at 5:21 PM, ricecube wrote:

    "lol tech geek" ...why would an OS which would make my pc a more or less dumb terminal raise RED flags at microsoft..i really hate when people drink too much of google koolaid..Yes Chrome looks promising but jeez it runs on netbooks ....there are millions of applications which are not "Webapps" which chrome doesn't support..

    Totally biased article...anyways there are few valid points but too much hoopla

  • Report this Comment On December 06, 2009, at 9:16 PM, TWEnglish wrote:

    As a long-time advocate for persons with hearing loss and someone who's made it her mission to make video on the internet both searchable and accessible, I don't think Google's auto captioning works well enough to accomplish either very well.

    Full searchability and accessibility begin with accurate transcription. You can find a pretty in-depth article at http://transendia.realtimetranscription.com/2009/11/21/youtu...

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