Unfortunately, an iPod won't do the crossfade, just iTunes.
brick - I was in the same position. If you have a definitive song list and you're happy doing it all in advance:
1) Drop them all into iTunes;
2) set them up in the order you want to play them in a playlist;
then set up iTunes so it does its automatic crossfade over e.g. 15 seconds;
3) then (this is the bit that takes all the buggering about) for each track set the points where song begins and ends so that when the iTunes crossfade kicks in, it's not too jarring. The point of this step is so that you don't end up having the fade up and the fade down of singing going over each other for example - and also you are not going to want to play the full 4-5 minutes album version of every song necessarily;
4) then once you have everything playing/fading in a "super disco mix" just like you want it in iTunes, download Audacity, which is a free sound recorder. You then hit record on Audacity, hit play on iTunes and record the whole mix.
5) Then you export the mix from Audacity to MP3 or CD format, and then just burn a CD of it. Audacity gives you an option to split a recording up into separate (seamless) tracks, which might be a good idea e.g. in case it gets scratched so you don't have to start the music right back from the beginning! And make 2-3 copies just in case.
This worked really well for the people I was doing it for - they only had about 30-45 minutes of disco music in the end (Scottish wedding meant ceilidh music etc) but it was no different from having a DJ that is just given a list of stuff to play.
The bonus of having it on CD is that you can just give it to anyone to play on the machine and you don't have to watch it.
All of the above is very easy - if you can edit a Word document, you can make it work. Try not to do it the night before, like I did...
Alternatively, you can still do it all from a laptop running iTunes if you're willing to stand in front of it. I would recommend still doing steps 1-3 so that the transitions are less crunchy/painful - but if you wanted to skip songs or fade up/down or throw another request in, you'd still have the flexibility to do that too.
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