The service gathers data from other music services and applications including iTunes, Xbox Live and Winamp to make a record of every song you listen to. The process is called scrobbling. On average, 800 songs are scrobbled every second on Last.fm.
The scrobbled songs are displayed on your Last.fm profile, which you can share with friends. The site also uses the songs you've listened to to make listening and friend recommendations.
Last.fm streams music from many major labels in custom radio stations based on the parameters you define and your past listening history, just like Pandora. After several years of success with that model (it currently claims 7.9 million monthly unique visitors) the site was purchased by CBS in 2007 for $280 million.
CBS says that the most popular artists on the service include The Killers, Coldplay, Muse and Oasis, providing some insight into the site's cultural community. In fact, Lady Gaga is the only pop artist who appears in the top 20.
Growing for seven steady years as a pillar in musical experience is an impressive achievement for a company that lives on the ever-changing web. Maybe someday we'll hear that Last.fm has reached 40 billion streams, not just scrobbles. We'll see!