Here's the most clear, step-by-step description I've found on how to do this precisely. It was written for older versions of iTunes, but works perfectly for v7 (I've done this a couple times at home using these directions). I'm currently running iTunes from an outboard drive on my iMac and have 4 users sharing it and a common library.
Share iTunes Among Users
iTunes makes use of a database file named "iTunes Music Library" or "iTunes Music Library (2)" or "iTunes 3 Music Library" or "iTunes 4 Music Library" (depending on which version of iTunes you are running) to list all the songs which it is aware of, and various other infomation including the contents and configurations of any playlists you have created. Additionally, there are the audio files themselves. Files ripped by iTunes will be stored in the location specified in the Advanced Preferences pane of the application.
In order to share both the database library file and the folder containing sound files each must be located outside of a users home directory. (It is possible to run iTunes on a shared store of audio files and with each user having their own library file but this document assumes you want to share both the library file and the audio files.) It's easier to set this up before adding any tracks, but where appropriate I have detailed the steps required to consolidate existing users Libraries.
Because this method will involve the disgarding of one or more users' library database files it is worthwhile to update all your MP3s' ID3 tag infomation before undertaking the consolidation. This will ensure that any manual changes to the library data will be available to the "master" copy of the library database file you will be sharing. You can do this by selecting all the tracks in the library view of iTunes and clicking "Convert ID3 Tag" under the Advanced menu and select the highest ID3 Tag version available. iTunes will then run through the tracks and update them.
If any of the system's users have yet to run iTunes, have them log in and do so now. This will create the required files where iTunes expects them and will make it easier to identify the correct locations in which to place the aliases we will create later.
If you are consolidating several users you will use one of the users infomation as the basis of the Library file we shall construct (it may make sense to use either the user who has the most tracks or the most playlists, but this is not required). Please note that in these instructions, all files/folders are COPIED over to locations not MOVED. This allows you to backout of things if you have problems. Do not delete the original files/folders until you are 100% happy with the final set up.
1. If you want to keep all the playlists of the current user then use the iTunes File > Export playlist command to create a text file for each of the playlists so they can be rebuilt if required. Store these temporary files in a location outside of the users home directory since it's possible they will need to be read by another user during the construction of the shared library.
2. Locate the "iTunes" folder for the user. For identification purposes, this folder contains the library file—which for v3.x is called "iTunes 3 Music Library"—and a folder named "iTunes Music". It may be located in the "username" > Documents folder, but most probably it is in the "username" > Music folder. Its location will depend on the options you have under iTunes preferences or which version of iTunes you have upgraded from. Copy this "iTunes" folder to Users > Shared. This will be the "seed" library to which all other infomation will be added as required.
3. If you wish to maintain separate locations for your MP3s (if, for example, you would prefer to be able to audition MP3s under iTunes and then add them to your MP3 store at a later date should you decide to keep them), then uncheck the "Copy files to iTunes Music folder when adding to library" option in the Advanced Preference panel.
4. Rename the "iTunes" folder, which you located in step 2 above, to "iTunes-old" or some such.
5. Make sure any other user(s) has read/write access to Users > Shared> iTunes (which you can set under Permissions in its Get Info window). Also grant them the same access to all folders and files contained within.
6. Create an alias of the Users > Shared > iTunes folder and place it in the same location as the "iTunes" folder you renamed in step 4.
7. Remove the " alias" from the name, remembering to remove the space before the word "alias".
8. Start iTunes. Check that all the songs are still listed OK and not orphaned by the move.
9. Go to the Advanced Preferences and make your Music folder Users > Shared > iTunes> iTunes Music.
If all is correct the first user will be running off the iTunes files located in the Users > Shared > iTunes folder. Check out the Library view of iTunes to evaluate the integrity of the tracks and playlists.
For each other user repeating Step 1 and Steps 3 through 9 above. After the change, each user should be running off the same library file and audio files as used by the first user, however their own tracks and playlists may not even exist yet.
Now, copy all the MP3s that the additional users have stored in their original "iTunes Music" folder over to Users > Shared > iTunes > iTunes Music. Then...
1. Click on the File > Add to Library command in iTunes and point it to Users > Shared> iTunes > iTunes Music. iTunes will then scan the folder for any new audio files it finds at the location, reading the ID3 tags of the MP3s to update the Share library file.
2. Click on the File > Import Playlist command and select each of the text/xml files you created in step 1 of the consolidation instructions for any missing playlists to recreate them. If you are not running version 3 or higher of iTunes then this import option will not be available, however at
www.dougscripts.com/itunes/ is a script named "Import Playlist" which can achieve the same effect.
When you are completely happy you can delete each of the old folders and MP3s from the each users home directory. It may be a good idea to move them to trash, restart iTunes, and see if all is all right, then empty the trash.
