Spotify has delivered a thumping one-two to iTunes by unveiling new social features and adding MP3 playback.

Spotify now draws on your Facebook profile to create a Spotify profile showing off your friends and playlists. The new features, hinted at last year, will be automatically updated next week, but in the meantime, you can add them by downloading the software at spotify.com/uk/download. Let's take a look at the killer new features.

Move over iTunes: MP3 playback

Spotify delivers a sharp kick to iTunes' raison d'être by playing MP3s alongside streamed and cached tracks. MP3s are denoted by little icons showing a musical note in a box, while streamed and cached tracks have no icon. iTunes playlists, including on-the-go playlists created on your iPod and Genius mixes, also appear as Spotify playlists.

You can't share MP3s with other users -- unless they also have them on their computers -- but you can mix them into playlists with cached and streamed tracks.

If an artist isn't in Spotify, the name is greyed out but the MP3 is still playable. If the artist is in Spotify, clicking on the name will take you to the list of tracks Spotify will stream. You can fix the details of an MP3, but the newly integrated Gracenote software won't necessarily put two and two together: even though we corrected the metadata for the Kim Fair remix of Ladyhawke's Paris is Burning, Spotify didn't make the artist name clickable to its other Ladyhawke songs.

Share and share alike: Sharing music

When you subscribe to a shared playlist, you can see the other users who listen to the list, regardless of whether you 've connected with them. If they've enabled the new social features, you'll be able to see their profile and playlists, and share music with them.

Spotify vs iTunes: Who wins?

Click 'Continue' to see the new features and how they shape up against iTunes. Are you a Spotify user -- or are these the features you've been waiting for? Is this the end for iTunes or is Spotify just too pricey? Sing us a song in the comments. If you're a user of Last.fm or mflow have your say too.

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Once you connect to Facebook, you have to stay signed in. Spotify doesn't store your information: rather it fetches your picture and friends list each time you look at your profile. It does this when someone else looks at your profile too, even if you aren't online at the time, which the Facebook connection dialogue box asks if you're okay with.
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When you connect via Facebook, you create a Spotify profile with your Facebook picture. On your public profile, your playlists are presented as a ten-track taster that you can edit by reordering the playlist.
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You can choose to publish your playlists -- or not -- and opt to automatically publish new lists you make. Your profile can show your top artists and tracks, but we turned that off before anyone noticed our unhealthy obsession with Cheryl Cole.
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You'll see some new functions in the left-hand sidebar when you open the new Spotify. The new Inbox collects music and playlists sent to you by other users. What's New is the new name for the home screen, showing new tracks and albums and charts.
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The Library feature takes on iTunes, pulling in and playing music stored on your computer alongside the streamed and cached music in your playlists.
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A new Feed tab shows music shared by your friends on Spotify.
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Each track can now be starred as a favourite, and shared via Facebook, Twitter or a specific Spotify friend. Sharing to Twitter unfortunately doesn't shorten the link, so it's still easier to copy the link as before and share via a third-party app such as TweetDeck.
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MP3s can be added to playlists alongside streamed tracks. Playlists now get nifty collages of artwork from the first nine artists in the list. Lists can now also be ordered by date added, or by user.
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Spotify now does just about everything iTunes does, including playing MP3s and clicking through to a store to buy music. iTunes offers a more sophisticated four-star rating system than Spotify's single star, but doesn't include the sharing function. iTunes also offers the very sophisticated smart playlist feature, but again doesn't let you share playlists except through the iTunes store. Spotify syncs with your mobile phone just like iTunes. And of course, iTunes doesn't offer streaming. On the other hand, iTunes is free, whereas you have to subscribe to Spotify or put up with ads. Which one does it for you?
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