Yes you can. I have a 2TB drive connected to the USB port on my Time Capsule. My iPhotos Library has lived on that 2TB drive for several years. Upon upgrading that library to the new Photos.app, I simply followed the instructions at this link: Designate a System Photo Library in Photos - Apple Support.
As a sidebar, I first attempted to convert the iPhotos.library to the new Photos.library over my wifi network, but it after 24 hours it had only migrated 2% of my 168GB library. Why was it so slow? Well, it doesn't matter that the new library is being built on the same external drive as the old library. What matters is that the Photos app is running on my MacBook Pro, which is accessing that drive over my wifi. In other words, the logic to convert the files resides on my MacBook, so the performance takes a huge hit over my home wifi network.
So, I started over. I removed the partially created (2%) Photos.library on the external drive. Shut everything down. Then moved the 2TB drive from my Time Capsule to my MacBook, connecting it to the USB port on my MacBook. Restarted everything, making certain that Finder did in fact now see the newly attached 2TB drive, and then followed the instructions found at the link above again. That is,
Follow these steps to designate a System Photo Library:
- Quit Photos.
- Hold down the Option key, then open Photos. One of the photo libraries is already designated as YourLibraryName (System Photo Library).
- Choose the library you want to designate as the System Photo Library.
- After Photos opens the library, choose Photos > Preferences from the menu bar.
- Click the General tab.
- Click the Use as System Photo Library button.
After you have navigated to where on your external drive your original iPhotos.library resides, select it, and then be sure to click the button, "Use as System Photo Library" so that it greys out. (very bad convention used by Apple, IMO). The migration will begin, and you will be very pleased with how quickly completes. For my 168GB iPhoto.libary, the migration to the new Photos.library took about 30 minutes.
After it finished, I launched Photos and presto, all of my photos/videos were there in the new app.
But I wasn't finished just yet, because clearly I didn't want to keep this 2TB external drive tethered to my "portable" MacBook, so I shut everything down, discounted it from my MacBook, reconnected it to the USB port on the Time Capsule, restarted everything, launched Photos, and presto, all of my photos/videos popped up. (note, because the photos/videos are coming from an external drive over my home wifi, it takes a few minutes for the Photos app to populate).
But still not finished! Now I turned my attention to the nifty new iCloud Photo Library setting under Photos/Preferences/iCloud tab. After checking the "iCloud Photo Library" box, I got this message. "iCloud Photo Library is only available on Mac OS Standard and Mac OS Extended formatted volumes. To check the format of a volume, select the volume in the Finder and choose Get Info from the File menu. The type of volume appears in the Format field."
I know that this drive is formatted as a Mac OS drive, so clearly Yosemite/iCloud do not see it as such, when it is connected to the USB port on Time Capsule. In fact, I can confirm this because as a drive connected directly to Time Capsule, it does not show up as a "Device" in Finder. Instead, it shows up as a Folder under Time Capsule, just below my Time Capsule backup volume, called Data.
In conclusion, you can definitely store your new Photos.library on an external drive, even a network connected drive, just as you've been doing with iPhotos. However, it appears that if the external drive is network connected, the Apple User Community will not be able to take advantage of "iCloud Photo Library", because it can't recognize it as a MacOS Standard or Extended formatted volume.
I have one more thing I plan to try, which is to disconnect the external drive from Time Capsule, and connect it to a network hub, and then try to turn on iCloud Photo Library again. I just want to take Time Capsule out of the equation completely, before I give up on iCloud Photo Library.
Good Luck!
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