Hadoop-LZO is a project to bring splittable LZO compression to Hadoop.  
LZO is an ideal compression format for Hadoop due to its combination of 
speed and compression size.  However, LZO files are not natively 
splittable, meaning the parallelism that is the core of Hadoop is gone. 
 This project re-enables that parallelism with LZO compressed files, and
 also comes with standard utilities (input/output streams, etc) for 
working with LZO files.
You can read more about Hadoop, LZO, and how we're using it at Twitter at http://www.cloudera.com/blog/2009/11/17/hadoop-at-twitter-part-1-splittable-lzo-compression/.
Once the libs are built and installed, you may want to add them to the class paths and library paths. That is, in hadoop-env.sh, set
Note that if you forget to index an .lzo file, the job will work but will process the entire file in a single split, which will be less efficient.
Hadoop and LZO, Together at Last
LZO is a wonderful compression scheme to use with Hadoop because it's incredibly fast, and (with a bit of work) it's splittable. Gzip is decently fast, but cannot take advantage of Hadoop's natural map splits because it's impossible to start decompressing a gzip stream starting at a random offset in the file. LZO's block format makes it possible to start decompressing at certain specific offsets of the file -- those that start new LZO block boundaries. In addition to providing LZO decompression support, these classes provide an in-process indexer (com.hadoop.compression.lzo.LzoIndexer) and a map-reduce style indexer which will read a set of LZO files and output the offsets of LZO block boundaries that occur near the natural Hadoop block boundaries. This enables a large LZO file to be split into multiple mappers and processed in parallel. Because it is compressed, less data is read off disk, minimizing the number of IOPS required. And LZO decompression is so fast that the CPU stays ahead of the disk read, so there is no performance impact from having to decompress data as it's read off diskBuilding and Configuring
To get started, see http://code.google.com/p/hadoop-gpl-compression/wiki/FAQ. This project is built exactly the same way; please follow the answer to "How do I configure Hadoop to use these classes?" on that page.You can read more about Hadoop, LZO, and how we're using it at Twitter at http://www.cloudera.com/blog/2009/11/17/hadoop-at-twitter-part-1-splittable-lzo-compression/.
Once the libs are built and installed, you may want to add them to the class paths and library paths. That is, in hadoop-env.sh, set
    export HADOOP_CLASSPATH=/path/to/your/hadoop-lzo-lib.jar
    export JAVA_LIBRARY_PATH=/path/to/hadoop-lzo-native-libs:/path/to/standard-hadoop-native-libs
    JAVA_LIBRARY_PATH=''
Using Hadoop and LZO
Reading and Writing LZO Data
The project provides LzoInputStream and LzoOutputStream wrapping regular streams, to allow you to easily read and write compressed LZO data.Indexing LZO Files
At this point, you should also be able to use the indexer to index lzo files in Hadoop (recall: this makes them splittable, so that they can be analyzed in parallel in a mapreduce job). Imagine that big_file.lzo is a 1 GB LZO file. You have two options:- 
index it in-process via:
 hadoop jar /path/to/your/hadoop-lzo.jar com.hadoop.compression.lzo.LzoIndexer big_file.lzo
- 
index it in a map-reduce job via:
 hadoop jar /path/to/your/hadoop-lzo.jar com.hadoop.compression.lzo.DistributedLzoIndexer big_file.lzo
Running MR Jobs over Indexed Files
Now run any job, say wordcount, over the new file. In Java-based M/R jobs, just replace any uses of TextInputFormat by LzoTextInputFormat. In streaming jobs, add "-inputformat com.hadoop.mapred.DeprecatedLzoTextInputFormat" (streaming still uses the old APIs, and needs a class that inherits from org.apache.hadoop.mapred.InputFormat). For Pig jobs, email me or check the pig list -- I have custom LZO loader classes that work but are not (yet) contributed back.Note that if you forget to index an .lzo file, the job will work but will process the entire file in a single split, which will be less efficient.
Hadoop LZO Installation : Errors and Resolution
Link : http://sudhirvn.blogspot.in/2010/08/hadoop-lzo-installation-errors-and.html