Bruce Kasanoff thinks personalization could save newspapers, and here's how: Generate custom front pages for each user. Avoid echo chamberi effects by providing alternate views. To make money, don't advertise. Instead, generate targeted leads for the most influential of your readers. Above all, focus on making your readers smarter. Remember information for them, not just about them.
Personalization holds promise for newspapers, and also feedreaders, online aggregators, and social news sites. Get it right and you can win the attention of lots of readers. It's a traumatic change for newspapers to attempt, though. People change; tuning for individual users implies adaptation and learning. Newspapers would require ongoing manual attention, expensive and culture-altering manual attention. Attention to take away from journalism and content-generation.
There may be an alternative. Personalization is important if you face customers, but perhaps newspapers needn't face customers. The alternative is a division of labor (and revenues) between writers and publishers. Let newspapers focus on original research and writing, and take a share of ad revenues from the aggregators that send them traffic.