The third method of recording music is in the box recording. In the box recordings are primarily referencing to computer recordings where all of the recording work is done inside the actual recording application. There is no audio coming in externally into the recording device. Recording music inside the box is most often, or at least to some degree, MIDI recording. Essentially, you are capturing the technical aspects of a performance through a midi keyboard or other midi instrument.
Once you have captured the performance, you have the ability to grab any sound from the vast number of software synths and sample libraries available and edit them till you get the sound you want. A performance played with a flute sound, can easily be changed or adapted to be a clarinet or oboe sound. This, of course, is not possible with acousticrecordings. The art of this types of recording lays in the ability to make these artificially generated sounds seem like the real thing.
When recording music in the box what you are actually recording is MIDI control signals, not the actual audio. This allows you to edit your performance, fix wrong notes or sloppy passages. You can also change the dynamics if you play a note too loud or soft by adjusting the velocity. You can change the length or sustain of notes and countless other parameters until you to get exactly the performance you desire.
When dealing with loops, you may be dealing with audio loops or MIDI loops. Audio loops are essentially acoustic recordings or electronic ones that are premixed and effected. You will have limited control in affecting audio loops, which is why the libraries are typically so vast. MIDI loops, by contrast, can be edited and manipulated in exactly the same way that any MIDI performance can including quantization andsound selection.