There was actually a single version of iTunes that let you share your library (streaming) over the internet, but it got abused so was yanked pretty quickly.
But the local network sharing remained, and was popular in college dorms etc.
Here's an article I wrote about it at the time...
IT’S the Apple software update you won’t want to install.
No sooner had users begun to discover the coolest but little-known feature in Apple’s new iTunes 4 jukebox software, than the company yanked the function in an update.
iTunes 4 had the ability to stream songs to other Macs via the Internet. By entering another user’s IP address in the "Connect to shared music" dialogue box, one could view another’s music library and playlists, and stream — not download — their songs.
Naturally this worked best if both users had a broadband connection.
However, a minority of users chose to abuse this privilege, hacking the function to allow the actual downloading of songs from other users’ Macs, in the same style as peer-to-peer file-sharing services like Gnutella and KaZaa.
Some websites posted libraries from which visitors could download songs.
Soon the American media was all over it, linking piracy to Apple’s supposedly anti-piracy iTunes Music Store This panicked record companies, which had done a deal with Apple to sell their music via the online store.
Apple responded this week by crippling the streaming function in an update, iTunes 4.0.1.
While Internet sharing is gone, users will still be able to stream their music on a home or local-area network.
User reaction to the iTunes ‘‘downgrade’’ has been predictably fierce, with many complaining that honest users shouldn’t be punished for the actions of a minority. Others can see Apple’s side, however, and reason that they don’t use Internet file sharing that much anyway.
So what to do if you want to continue Internet music sharing with friends? The obvious solution is not to upgrade to iTunes 4.0.1. However iTunes 4 won’t share with 4.0.1, so you’ll have to ensure your friends don’t upgrade either if you intend music-sharing with them. And if you don’t upgrade you’ll miss out on other improvements like
‘‘performance and network enhancements’’, along with future features.
Another solution is to keep two copies of iTunes on your Mac: version 4.0.1 for day-to-day use and version 4 for sharing. To do this you’ll have to download the whole version of iTunes — don’t use the Software Update control panel — and move iTunes 4 out of the Applications folder while you install 4.0.1.
In any event, you can continue to enjoy music sharing on your local network. If you have two AirPort-enabled Macs, you can store all your music on, for example, your desktop machine and ‘‘narrowcast’’ it to your laptop anywhere within a 50m radius (even further if you have AirPort Extreme).