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Music-streaming service Spotify is now allowing merchandise sales through its player, as it prepares itself for the arrival of a major new rival.

Dr Dre is set to launch his Beats Music service in the US on Tuesday.

Spotify's foray into merchandising is seen as the site's latest way to improve its relationship with artists and record labels.

The company said it would not be taking any percentage of the products sold through the platform.

Compared with services like Apple's iTunes, where music is bought, streaming sites offer revenues that are regarded by some as unreasonably minuscule.

Radiohead's Thom Yorke took his work off Spotify in July last year, declaring on Twitter that he was "standing up for our fellow musicians".

Tom Pakinkis, deputy editor of Music Week, said: "Spotify's main thrust recently is transparency.

"That's what the artists have been crying out for for quite a while now. The market as a whole is slowly but surely winning [over] the last few artists that are holding out from the service."

As part of that effort, Spotify has recently sought to include other ways for artists and labels to earn money.

In conjunction with London-based start-up Songkick, Spotify suggests local gigs and concerts based on the music a user has been listening to.

Announcing the plans, Spotify's head of artist services, Mark Williamson, said: "We're really excited that Spotify's 24 million music-loving users can now see merchandise and concerts while listening to their favourite artists, and that we, in turn, can provide additional revenue opportunities for artists of all sizes."

'Song with banjos'

Keeping artists on-side will be a key part of any streaming site's continued success as the market becomes more crowded.

Beats Music will now be competing not only with Spotify but the likes of Pandora, Rdio, Bloom.fm, Deezer and Google Play, which all offer similar services.

Various music professionals and DJs have been enlisted by the firm to create expert playlists, rather than the algorithm-based approach used by other sites.

"We tried to remember a time a robot found us magic but all we could find were the times the robot made us laugh," the company said in a blog post poking fun at existing services.

"'You like Pantera? Have you heard of Black Sabbath? You like Mumford and Sons? Here's another song with banjos!'"

'Significant player'

Dr Dre's involvement in the headphone industry, which started with the launch of Beats in 2008, has attracted hundreds of millions of dollars in revenue and spawned a vast array of other artist-endorsed headphone products.

Mr Pakinkis said the strength of the Beats brand alone set the music service apart as a credible rival.

"It's a big company with a lot of marketing resource, and that gives the implication that it could be a significant player," he said.

"There are a lot of different players on the market now, and the struggles of some of them financially are well-documented."

To clutter the market further, another streaming service - from controversial internet tycoon Kim Dotcom - was launched on Monday.

His offering, Baboom, went live with a single album available to play - . More content is expected at a later date.

New Zealand-based Mr Dotcom is currently fighting extradition to the US on charges of copyright infringement.

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