US media giant CBS recently snapped up social music site Last.FM for a cool $280 million  arguably the largest Web 2.0 acquisition in the UK.

The London-based social networking site allows users to connect with other listeners with similar music tastes, to custom-build their own radio stations, and to watch music video-clips. This happens through streaming radio, which is based on the playlists of songs users have been listening to on their own computers, as well as what’s on the playlists of their peers.

Established 5 years ago, Last.FM maintains about 15 million monthly users in UK (4 million in the U.S.) and hangs its hat on music video distribution thought to be a good fit with the traditional broadcast giant. Last.FM also has video distribution in development, in line with the YouTube-like marriage of social networking and viral video distribution.

Many believe the acquisition is a strategic move for CBS to build off its radio, music, and television assets to carve out an online presence (similar to the way that News Corp. has done it with Fox Interactive Media and MySpace).

According to the Kelsey Group, this could bring CBS the foundation for a pay-per-action model around songs: The product comes with a recommendation engine that provides links to buy music, based on what users and their friends are listening to. This could have nice synergies with its existing music properties, and for music it doesn’t have licenses to play, it offers 30-second samples. Bottom line, it extends CBS’s reach, and brings many possibilities for new ad formats and distribution to new online audiences.

The media giant is also currently expanding its advertising portfolio, which includes online and terrestrial radio, broadcast and cable TV, and outdoor advertising. Instead of focusing solely on generating programs, CBS has begun to explore a variety of mediums for its broadcast audiences. Their acquisition of Last.FM is a clear sign they are moving towards this direction.