Few would dispute that we live in an age of information overload. In the last few years alone, blogs have increased the torrent of information each day to unmanageable levels.
This would explain, then, why a corresponding torrent of startups has surfaced recently to help us filter, manage, and control this flood of information.

Some rely on insightful algorithms that understand popularity to filter the news, while others rely on the preferences of readers.

For example, Digg is a San Francisco startup that ranks news items by letting people choose which stories they like. It just landed $2.8 million in venture capital from Omidyar Network, former Netscape founder Marc Andreessen, and Greylock Partners. We also understand that a comparable site — Memeorandum — may close a round of financing shortly.

The concept of making users prioritize or create hierarchies for news is not new — Slashdot has been doing it since 1997. But the latest generation of sites like Digg and Memeorandum are showing that user-prioritized news is, indeed, a powerful and easy way to drive traffic — in some cases to a site created by a single employee with a lone server.

Memeorandum was built by founder Gabe Rivera in his spare time; it has already become a well-regarded news destination. Stories that are popular on Memeorandum gain that status by being widely linked by other sites.

So what’s next? What will Digg, Memeorandum, and other companies do with the money they raise? Most haven’t even tried to generate revenues by selling ads on their pages. Digg has built substantial traffic just with its technology coverage and Memeorandum has shown early success in both technology and politics.

These services could expand their destination sites to other topics, get the same breadth of coverage that Topix.net, an early entrant in the news filtering space, offers, and then perhaps partner or get bought by the kind of big publisher (Knight-Ridder, Tribune, Gannett) that bought Topix.

But Topix, at least, was relatively early to this game, and so reaped the rewards that sometimes await a first-mover. In fact, the space may already run the risk of being overcrowded.

Among other entrants is Inform.com, a recently-launched New York-based firm that automatically categorizes news by breaking down items by key elements. Other related offerings come from Findory, a Seattle-based venture started by a former Amazon employee, which bills itself as a personalized news site that learns and makes recommendations based upon the articles you read.

Another is Blogniscient, a service that uses a number of measures to rank blog entries according to the impact of the contribution they’re making to the blogosphere. The list goes on.

More here.