Thanks to 360east.com for the original post that helped me set this up. The directions on the 360east blog are for using GarageBand as the recorder. Check it out, too.
I decided to write more detailed instructions to make it easier for non-techies. Here are the steps:
1. Download and install the following:
- Soundflower from Cycling 74.
- LineIn from Rogue Amoeba.
- Audacity from Sourceforge. This will be our recorder.
2. Configure the sound settings of your Mac.
- Click the Apple icon > System Preferences > Sound Output. Choose Headphones (or Internal Speakers, if you're not using Headphones). See screenshot, below.
- In the same window, click Input. Choose Internal microphone. Close the window.
3. Configure Audacity.
- Run Audacity. In the menu, click Audacity > Preferences > Audio I/O.
- Set Playback Device to Built-in Output.
- Set Recording Device to Soundflower (2ch)
4. Configure LineIn (we're almost there).
- Input from: Built-in Input
- Output to: Soundflower (2ch)
- IMPORTANT: Click the Pass Thru button before recording the call. On playback, turn it off (if you're wearing headphones, be careful as this may cause deafening feedback).
5. Configure Skype (just a bit more patience).
- Run Skype and click Skype > Preferences > Audio/Video. (The picture below is Skype version 5.0)
- Set Microphone to Soundflower (2ch)
- Set Speakers to Soundflower (2ch)
6. Run Soundflowerbed.
When you install Soundflower, you also install an App called Soundflowerbed residing in your /Applications folder. You can also use Spotlight to find it.
Soundflowerbed shows up on the upper right menu bar of Mac OS X.
- Check Built-in Output in the settings for Soundflower (2ch).
- Important: Leave the 16ch off (or you may get deafening noise!).
6. Hit the record button on Audacity.
7. Start your Skype session and have fun!