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How Can Directory Assistance Be Free?

By Chris Anderson  02.25.08 | 12:00 AM

AT&T and its competitors rake in $7 billion a year from directory assistance, charging 50 cents to $1.75 per call. Google, on the other hand, offers its automated GOOG-411 service gratis. How can the search juggernaut afford not to charge?

A) Get free data. Each time callers to GOOG-411 request a phone number, they’re giving Google valuable information. Each call provides voice data representing unique variations in accent, phrasing, and business names that Google uses to improve its service. Estimated market value of that data since the service launched last spring: $14 million. B) Invest in the next big thing. Still, the value of that information hardly compares with potential earnings if Google were to charge $1 per call. Why give away the store? Honcho Peter Norvig has said that GOOG-411 is a test bed for a voice-driven search engine for mobile phones. If it serves ads to those phones, Google’s share of that market could be measured in billions. 

Chart: Steven Leckart; Chart design: Nicholas Felton; Sources: Jingle Networks, Linguistic Data Consortium, Opus Research

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