Well they keep a track of ALL music you play. And as we very well know things like music file fingerprinting (stamped by legit rippers like itunes ripper) exist, so its quite easy to know if the music you listen to is original or a violation of copyright protection or not.
Then lets look at DRM, a concept which aims to restrict you who plays what on which hardware, thats the level of control record companies are willing to impose upon you.
Therefore imagine a breach of the last.fm database, these companies will know exactly who is legit and who is not.
Already within the united states people from ages 7-80 are dragged to courts like common criminals for using software like limewire, Bit Torrent to infringe upon copyrights. These people have no morality and will stoop to any level to account for their lost money.
So picture this the MPAA (music producers association of america: the evil lobbying arm of the record companies) buys over last.fm and has access to their database. They will know who you are, what you listen to and how much jailtime you gotta serve.
Lets take a look at an example:
Mettalica (pirate haters) were due to reease their newest studio album "Death Magnetic" however before it was released last.fm showed this for the number of listeners.
Now isnt that scary....they can know who posted these scrobbles and from where...i.e know who owes what to mettalica...
The only thing stopping them is that pesky privacy agreement..but then who really cares about the privacy of a pirate(read evil-stealing-child-molesting-scum by the MPAA).....
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