From the Spotback FAQ:
Spotback is a new breed of personalized news service. It is designed to quickly learn each user's fields of interest and style by analyzing how users rate and interact with news information.The site is clean, responsive, and easy to use. No login is required, just start rating articles. When you rate an article, a similar article immediately will slide on to your screen in a nifty AJAX-y way.
It then offers users the most interesting, relevant and hard to filter news information personally tailored to their taste. Spotback uses sophisticated algorithms that analyze social behavior.
Unlike Findory or the recommended stories section in Google News or MSN Newsbot, articles you click on and read do not change your recommendations. On Spotback, only explicitly rated articles are used for the personalization.
Spotback recommended articles are marked with a button that says, "[people] also liked". Clicking on that button brings up an explanation of why the article was recommended. The explanations list similar people to you, suggesting that Spotback is using a form of collaborative filtering or, most likely, user clustering to power their recommendation engine.
In my experience, the recommendations seemed off. Rating three articles about Google positively brought up recommendations for "Guerrilla marketing Euro Cafes", "Online and Live Poker", and "People Talking about Architecture" among other things.
This could indicate a problem with the recommendations algorithms or could be due to lack of user behavior data. It will be interesting to watch Spotback over time and see how the recommendations change.
Spotback gives me flashbacks to Memigo, a news recommendation site that preceded Findory, though Memigo is missing the wiz-bang AJAX features.
Interesting to see new startups launching around the idea of personalized information.