It may not yet be available in the U.S., but Spotify firmly planted its flag in the digital music landscape of tomorrow with a major upgrade that, yet again, positions it as the digital music service to beat.

In what the company calls its "biggest evolution" since its launch 18 months ago, Spotify added several new features related to social networking and library management that point to how the “cloud-music” future may play out.

On the social networking side, Spotify users can now create a music profile that allows them to publish their playlists, top artists and top tracks with each other and synch all their activity via Facebook. Users can send and recommend tracks to each other both directly, or more passively by allowing connected friends to view each others’ Spotify activity via a news feed.

On the music management side, Spotify users can now add files from their personal music library to the service, blending them with playlists and favorite lists alongside songs accessed from the cloud. It also has a new synching feature that lets users wirelessly sync their music files to a supporting mobile device without the need to plug in a USB cord.

"We're marrying the best bits of Facebook and we're marrying the best bits of iTunes and we've moved them in to Spotify," says founder and CEO Daniel Ek.

Spotify until now has lacked a real social component other than allowing users to scrobble their song listens through (that feature remains in the upgrade). With the upgrades, Spotify is hoping to both drive music discovery through digital word-of-mouth and ultimately keep users engaged with the service longer (which helps its ad-serving strategy). No longer do users have to take the extra step to publish their playlists on their blogs or profiles, or e-mail them to friends. Under the new capabilities, all this happens automatically.

Taking On iTunes

But while the social element will get a lot of attention, the music management aspect can’t be overlooked. Spotify always said it wanted to create an iTunes-like interface for cloud music. By allowing that same interface to locally stored music, Spotify is more directly taking on iTunes in hopes of becoming the default music management system for users. Until now, users had to use iTunes to manage their locally-stored music files and Spotify for their cloud-based music. Spotify’s upgrade allows them to do both. More significantly - iTunes doesn’t. At least for now. This certainly puts pressure on Apple to get its cloud-based, Lala strategy in order before Spotify launches in the U.S.

The upgrade will happen automatically for users of the ad-funded streaming service and the premium ad-free service. The full details include:

Social Features
- Connect to Facebook from Spotify, adding friends who have selected the same feature. Friends' profiles will appear in a new 'people' sidebar.
- Add usernames: you can add people by typing their Spotify username into the Spotify search field.
- Publish your Spotify profile to the Web, on a blog, Facebook page, Web site or elsewhere.
- A new inbox lets you send tracks to friends directly within Spotify by dragging and dropping a track to their name in the 'people' sidebar.
- Facebook feed: music friends have posted on Facebook will be visible on the Spotify 'what's new' page and via a new 'Feed' tab.
- Popularity count for playlists showing how many other Spotify users are currently subscribed to that playlist. You can see the usernames of those who added the playlist.
- Track playlist changes: see when a track was added to a playlist and by who.

- Local files: if any music is missing on Spotify, users can import a link to all the music files stored on their computer.
- Gracenote software to identify any of user's own tracks without full details.
- Local file linking: allows users go from their own music file into an artist or album page on Spotify.
- Every track and album on Spotify can now be 'starred' - allowing users to tag favorites into a special sub-folder.
- Wireless synch: copy your music files to a mobile phone without connecting a USB cable.
- Filter bar to allow easy searching.

Additional features
- Mosaic images for playlists made up of first nine tracks' artwork.
- A share icon makes sharing current listening easier.
- Automatic track replacement: Spotify will try to find a replacement for any track a user can't play, sent for example by a friend in a different country via Spotify.