How can 7 people play Rock Band 3 at once?

Up to seven players can play Rock Band 3 locally using All Instruments Mode.

This mode is required to use multiple guitars or a combination of guitars and keyboard at the same time.
Note: Vocalists are not scored when All Instruments Mode is enabled.

1. Press Start on any instrument or the controller used for microphones.
2. Select the checkbox next to All Instruments Mode.

If you are prompted to enable All-Instrument Mode when you do not want to use it, you may have multiple instrument dongles connected. You may need to unplug the dongle you aren't using in order to get the game to stop suggesting this mode