Howto Relaycast (For Mac OS X Users)
What Is Relaycasting? | Howto Relaycast (Mac OS X) | Howto Relaycast (Winblows)
Here's one option that you could use to setup relaycasting on a Mac. Since I broadcast using GarageBand (installed as part of every new Mac), Nicecast ($20 or so streaming tool), and Soundflower (an "extra" built in to Nicecast) those are the apps and screenshots you'll get here.
I have a 2 channel Mackie Onyx Satellite Recording Interface which is a firewire audio input device. I use it to get my bass and microphone inputs into GarageBand and to monitor performance. To do relaycasting I need to take that audio and layer it on top of what I'll be listening to in iTunes.
There's no way in GarageBand to simply "eavesdrop" on what iTunes is playing in a live stream directly. A tool that comes as an extra with your copy of Nicecast is called "Soundflower". Soundflower allows you to redirect audio on the system.
Open Nicecast and in the Nicecast menu click on "Install Extras..."

Click the Soundflower tab and install the utility.
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Some info about the Soundflower tool that appears in that dialog window:
"More Information
Soundflower is a virtual audio device that provides an easy and simple way for Max/MSP and other applications to send and receive audio to and from any other application. Running with very low latency and cpu usage, Soundflower allows each client application to use its usual buffer size.
For more information on Soundflower, please see Cycling74's website:
http://www.cycling74.com/products/soundflower.html"
With Soundflower installed we have new audio selection options when choosing input and output devices on the system.
What I do to redirect the sound from the system (which includes iTunes) is redirect system sound. Open System Preferences and click on the Sound preference.
Normally I would have selected my Mackie device for system output so that I can monitor any sound on the computer via my headphones in the FW device/mixer. I like this alot because the Mackie has two separate headphone outputs with individual volumes so I can have someone sit with me and listen in that way.
Instead we want to output to the Soundflower 2 channel "device". All system audio will go missing at this point. Nothing is yet "tuning in" to listen to the Soundflower device.
GarageBand cannot listen to two separate midi devices at once by default. If you look in GB's preferences now you'll see that the Mackie device and the Soundflower virtual device are available as input options. So you could listen in / record from one OR the other, not both yet. You can verify this by switching you audio driver back and forth while an MP3 plays in iTunes.
The trick is to pair the audio input devices so that GarageBand can address more than one at a time. This paired virtual device is referred to as an "aggregate device". Open the "Audio MIDI Setup" utility in the Utilities folder.
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When the utility opens click the Audio menu and click "Open Aggregate Device Editor."
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A sheet opens attached to the window with various options. Press the "+" (plus sign) button and create a brand new device. Check the "Use" checkbox next to your input device and the Soundflower 2 channel virtual device. In my case that adds up to 4 inputs (2 from the Mackie and 2 from the Soundflower).
The groundwork has been laid out. It's time to go use it.
In GarageBand open the perferences window and click the Audio/Midi tab.
For an input choose your aggregate device!
For the output I choose my Mackie directly since it's where my headphones are attached.
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One track in GarageBand is my microphone input. In the info panel I ensure that the Monitor setting is "on" so that it gets sent to the stream. The input source is channel 1 of the aggregate (Mackie ch1).
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One track in GarageBand is my bass guitar input. In the info panel I ensure that the Monitor setting is "on" so that it gets sent to the stream. The input source is channel 2 of the aggregate (Mackie ch2).
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The last track in GarageBand is iTunes/system input. In the info panel I ensure that the Monitor setting is "on" so that it gets sent to the stream. The input source is channels 3 and 4 stereo of the aggregate (Sounddflower ch 1+2).
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Make sure the red "record" button is on for each track so that monitoring is active.
Now it's just a matter of tuning in the stream from the originating relay partner. In iTunes press command-U to get the Open Stream... dialog.

If you can now hear your microphone, guitar/bass/keyboard, and the incoming audio stream together in your headphones you're done. Just start streaming with nicecast as you normally would and present your relay to the world.
Enjoy
What Is Relaycasting? | Howto Relaycast (Mac OS X) | Howto Relaycast (Winblows)
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