What goes on Inside the iPhoto Library Folder
Despite what it might sound like, the iPhoto library folder contains much more than simply the photos you have uploaded and imported. It also contains settings, back-ups, metadata for your pictures, templates you've created, and more. On the default settings, the majority of the contents of the library folder are hidden, and you interact with your photos primarily through the iPhoto interface. However, you can display them if needed by holding down control while clicking on it and picking Show Package Contents.
In iPhoto 7, Apple changed the structure of the library folder so that it is a package instead of a folder, which changes the appearance (though not the contents) of a folder to look like a single file. This adds a level of security to more sensitive folders and can prevent unknowing mistakes. Regardless of what you're working on, be sure to make a back-up of all your files and photos before modifying or deleting any of the contents.
Library.data or Library.iPhotox
(X denotes the version of iPhoto you're running.) These files contain all the metadata for your pictures, as well as albums and rolls you've created in the iPhoto library interface. You want to be especially careful with these files, unless you feel like reentering all the metadata for your photos.
This file contains information that allows other Apple applications, such as iTunes or iMovie, to detect and integrate photos that you've imported into iPhoto. Altering or deleting this file will not change anything in iPhoto itself; it merely affects how other applications interact with it.
This file works with the Apple search application Spotlight to index your photos and make them available in searches quicker. This file is only in versions of iPhoto 5.0.2 and on.
This file is written by the iPhoto Library Manager and contains the personal settings you've created for your library viewing and storing. This file gets switched out as you change the library you are viewing or working in.
iPod Photo Cache
This file will only be present if you have synced up an iPod with photo capabilities to your iPhoto library. It contains information about the most recent syncing process, what condition and which photos you synced, and the data associated with those photos. This saves time during future syncing by telling your iPod which photos need new information imported and which have not been altered.
This file prevents iPhoto from opening and interacting with more than one library at a time. This keeps multiple versions of iPhoto from causing conflicts in a single library.
iPhoto 7 and up - Contents/PkgInfo
This file was added to iPhoto 7 and later versions to give your library package a means of being detected by Finder, the built-in search tool on Macs.
This folder doesn't have much use. There's no way to access it via the library interface, although it automatically imports photos placed into it into the library and then deletes them. Since there are other methods of doing this, there's no real reason to use this.
Older versions of iPhoto stored the actual picture files in folders grouped by year, which contained subfolders chronologically arranged.
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