Spotify is trying to be the perfect on demand music service, Last.fm isn't. It's something we tried and ended up moving away from a year or two back.
On demand music is a very difficult market to be in. There are lots of companies trying but many failing or hitting difficulties, like Spotify in the US. There are real challenges in a) being profitable and b) stay on the good side of labels.
Personally I believe that the on-demand part of music streaming is commodity and more can be easily replaced, where as scrobbling provides a richer and more personal experience. However, I do agree with parts of the article, Last.fm hasn't moved as fast as it could have, some features need adding and some improving. That's part of the plan for this year.