iTunes consists of two parts:
One or more Libraries, which are just a catalogs or indexes of all the music iTunes knows about.
Only one set of physical music files.
The Library catalog is a separate file, and is kept in a different location than the music files.
The Library files are located at: NETWORK-DATA/Music/iTunes Libraries.
The current library in there that we are sharing is called Joint Library.
The actual music files can be physically located anywhere, but we keep all of ours in a single folder located at:
NETWORK-DATA/Music/iTunes Music
Within the iTunes Music folder the iTunes preference is selected that keeps the music files organized into this structure:
Artist (Folder)
Album (Folder)
Song (File - name is prefixed with the track number of the album)