How to create my own recommendation engine?

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I am interested in recommendation engines these days and I want to improve myself in this area. I am currently reading "Programming Collective Intelligence" I think this is the best book about this subject, from O'Reilly. But I don't have any ideas how to implement engine; What I mean by "no idea" is "don't know how to start". I have a project like Last.fm in my mind.

  1. Where do (should be implemented on database side or backend side) I start creating recommendation engine?
  2. What level of database knowledge will be needed?
  3. Is there any open source ones that can be used for help or any resource?
  4. What should be the first steps that I have to do?
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