Reddit is still good by me if we can just get the political stuff out of there. I don't mind a few good stories here and there, but it's become completely overpowering, especially in the Hot list. If you use programming.reddit.com you're in good shape. Still good stories, and any submission you make can still get some traction if people like it. General stories though get clobbered by the relentless Iraq/Iran/Bush/Anna-Nicole/Cheney/RandomGayPastor element.
While I agree that personalization is the way to go, I think that most users would like more control over personalization rather than rely on some mysterious collaborative filtering algorithm. Moreover, people read blogs for a reason: they actually want to see all the postings from those blogs, not potentially interesting postings from unknown blogs. Consequently, instead of having a collaborative filtering algorithm, one might use a social network approach. Moreover, rather than recommending individual posts, the user would instead build a set of trusted sources (users and/or feeds) via the social network.
"the online news space is grossly oversaturated. It will take a significant technology step forward for a new startup to get traction."
Seemed to be room for something like news.YC (yah, I know it's a much smaller niche). It's the social networking side that findory is missing, which, BTW, is why it's cool, but not in the same category as digg and reddit. No user generated content that I could see...
I would say that reddit *created* it's startup oriented niche to a large degree - Particularly for college and maybe even highschool guys who know computers well but never seriously considered starting a company so soon.
In this regard I think of the early reddit and now n.yc more of as clubs, like the acm club I used to attend, than another news site. What really makes this club great is it's members and what they come here expecting.
Why is the linked news site failing? Right off, the front page design is a show-stopper. I can hardly force myself to get past that.