8tracks, the “legal Muxtape” that allows users to build playlists consisting of eight tracks and share them with friends, has launched a number of new improvements designed to flesh out the site beyond basic music playback. Users will now be able to use a Twitter-like “Follow” system to receive alerts when their favorite DJs post a new mix, and will also be able to see all comments across all of their playlists aggregated to a single page.

8tracks is very similar to Muxtape, a popular site with a very basic interface that let users swap playlists with each other. After skyrocketing to popularity earlier this year, Muxtape was shut down in August because of legal issues with the RIAA (in September it announced its return, but much of the site’s functionality has been altered).

8tracks keeps on the right side of the law by making use of a DMCA loophole that allows it to operate as a small online radio station, which have lower licensing fees for the music they stream. Each playlist mimics a miniature radio station: while users are free to share their playlists with friends, the site doesn’t actually show what songs are in the playlist – you have to listen to find out. 8tracks CEO David Porter says that this isn’t really a loophole, but does acknowledge that the cheaper licensing fees are what has kept the site in operation. He also notes that if the site continues to expand it may face falling into another bracket with much higher licensing fees.

To counter these fees, Porter says that 8Tracks will try to forge agreements with indie label aggregators like The Orchard and IODA which are more willing to offer a discount in exchange for the exposure the site will provide. He (and many other music sites) also harbors hope that royalty fees may be relaxed in the future (negotiations are currently in the works).

Also check out Favtape, a Muxtape on steroids that is powered by Seeqpod.