Hi. Been there, done that. Kind of.
This was how it worked. The splendid Mr Peter Pringle supplied a custom made karaoke track, to which a bunch of us in various countries played along, recording our playing. I then lined all the recordings up in GarageBand, removed most of the backing track, played producer with the settings and the result was this...
http://secretsurprise.blogspot.com/
Loads of fun. Well worth the effort. :-)
Here's an interesting idea. What it needs is someone who is clever with software to implement it. Maybe someone already has. Is Max/MSP TCP/IP savvy?
The problem with jamming online is latency - it takes time for data to traverse the Internet. Like an echo on a long distance phone call. And worse still, the length of the delay is variable and unpredictable. It makes playing in time a bit tricky.
One way around this is to [i]increase[/i] the delay to a predictable length. Say fifteen seconds or more. More than enough time for your computer to blend the audio stream from your instrument with an incoming audio stream, normalise the volume and transmit the result. With compression and decompression as required. And still plenty of time left over to record a local copy of your own playing and buffer out any variation in internet lag or stalled connections.
Think of a circle of computers behaving like this, like elements of a multi-tap delay loop. You hear what your predecessor in the loop played fifteen seconds ago, and the next person will hear what you played in response to that, and what you played along to. Each successive person will hear your playing at an increasingly reduced volume, as it fades along the loop and is overlaid with your successors' playing. Someone kicks off, and when the next person in the loop gets it, they join in. And so on... By the time your own playing comes back to you it will be well down in the mix, but everything that you hear will have been informed by it, and by the contributions of everyone in the loop.
One might call it a Geodesic Looper. Literally world circling.
Afterwards you can combine and mix down the local copies to hear how it would have sounded to an audience located at the centre of a circle of all the players in the loop.
And then hack away at it, taking out the bad bits and leaving something actually enjoyable to listen to, rather than the raw sound of everyone having at it all the time!