My library is coming up to 5TB which is sounding a bit crazy but then I don't have cable subscription so I just buy season passes every year for the shows I watch.
So that includes TV shows and movies? Mine is 4.75 TB, but I am currently on B in my attempt to rid my iTunes of duplicates (I can't use the iTunes function as there are duplicates that I want to keep, e.g. Beatles albums in mono, stereo, original mix and most recent mix. I also use VLC for movies as I have my Mac Pro hooked up to my TV, a 60" Pioneer plasma, also using the TOSLink for surround sound.
As to the music, that only includes mostly MP3, and trying to upgrade everything to 320. It does not include my other files of FLACs and Apple Lossless, which I can't or don't add to iTunes, it takes long enough to open as it is. I do wish that Apple would rethink iTunes to a cleaner, leaner app and if they want a media center app, add a separate one. Music is different from movies and TV and a different approach seems worthwhile.
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Can you tell the difference between 256k and 320k?
Depends on where and when you listen to music. I use my iPod touch in my car, and it has a good sound system, but even with that, external noise, car noise really limit how much detail you can hear, though when you crank it, the differences become more evident. At home I can play that same music through my stereo/surround sound system, and while the difference is relatively slight (you can really hear the difference between 128 and 320), there is a difference.
The bigger difference is when you listen to a cd or FLAC or Apple Lossless file, which provide more complete sound. While you can't hear the lower and higher ranges, if you have good ears and a good system, you can feel the difference. But it is an experience in that if you are not used to it, you may not have the same sense of it. I grew up in the age of stereo and stereo systems, with big speakers and big sound, and I still love to crank it at times, and that's when you really notice the difference, a good quality cd or lossless file can't be beat for a distortion free loud listening experience.