Collaborative music is music composed or performed by more than one person working together.
In the RealWorld, collaboration on music is the norm, not an exception. Soloists are a rarity; most work is composed for performance by more than one artist. Many composers also work together in teams; deriving works from other works -- new arrangements, etc. -- is common.
In a looser coupling, musicians and composers often collaborate across time or space. Musicians will adapt an earlier composition, or re-record it; composers will reference earlier works, include fugues, make variations. Including clips of music of music and other sound as samples in a piece is a common technique in hiphop and electronic music. It might be a little cavalier to call this "collaboration", though, since the earlier contributor wasn't aware of the final goal of the later adaptor/sampler/whatever.
In the electronic world, collaboration on music is less common.
Some projects doing collaborative music
- FluxDepository has some collaborative music projects
- OpSound http://www.opsound.org/ collects CreativeCommons -licensed musical works, and encourages embellishment and additions. An example would be [My Life Changed] (a very pretty song, btw).
See also ThoughtStorms:FreeMusic