It was just last week we reported that Last.fm was testing a new music player that uses YouTube to power its Internet radio stations. And now the London-based company has announced it’s now teaming up with music-streaming heavyweight Spotify to bring its entire catalogue into the fray too.

Certainly, this all points to a big restructuring for the online veteran, as it looks to remain relevant in an increasingly competitive field while keeping licensing costs down. While Spotify, Rdio and other such services let you play music on-demand, Last.fm has always been more about recommendations based on what you like – you never actually control the next song. With Spotify in tow, that’s all changing.

273 Last.fm now lets you stream your Spotify music collection tooSo now you can control your Spotify music directly within Last.fm via via a little playbar at the bottom of the screen – and this works whether you’re a premium or free Spotify user.

While it’s not exactly a pivot, it’s a massive move from Last.fm and perhaps even a very smart one – if it can’t fight the on-demand music-streaming fraternity, it may as well bring them on board. Needless to say, your scrobbling history will remain as before, so this is still very much Last.fm…just in a slightly different flavor.

Did Someone Say On Demand? | Last.fm Blog [via Musically]