Felix starts out talking about MyWare, which sounds like Spyware, but is basically people spying on themselves – if people tell last.fm what music they’re listening to all the time, last.fm can infer other music they might like and make recommendations, based on the “knowledge of the crowd”.
They have some plugins for audio players that submit what tracks you listen to to last.fm – they currently get 8 million submissions a day. That builds up a catalog. There is a lot of noise, but currently 8 (out of 25) million tracks in the catalog have clean metadata.
They can calculate user-to-user similarity (who else likes what I like, and what else do they like?) and artist-to-artist similarity (what other artists might I like).
The backchannel chatter has it that you have to let last.fm record what you listen to for about two months before it really works well for you.