This lecture covers the Shannon-Fano algorithm for data compression, introduced by Robert Fano, a pioneer in information theory. The algorithm assigns binary codes to letters based on the number of questions needed to guess them. By following specific rules, a unique code is created for each letter, ensuring a perfectly decodable message. The lecture demonstrates the application of the algorithm to the phrase 'IL FAIT BEAU A IBIZA,' showcasing the efficiency of the compression method and its relationship to entropy.