+1, this strategy is often called a "concierge" MVP. You deliver the service you claim, but behind the scenes everything is actually incredible manual. Once you proved people like the service, you then go make the process less manual. Zappos and Amazon are both famous for doing this.
customers pay for the service, not the method-by-which-the-service-is-provided. If they explicitly sold it as a service without a human in the loop, then I think that's bad. If they just sold transcription..... then this is transcription.
