I don't use loops because choosing the notes is part of what I consider the compositional process--if someone else is choosing the notes, I feel like I'm giving up part of the compositional responsibility to someone else.
I say the same of the production process--very few loops are raw recordings--and I feel like if I use loops, then I have to center my production (mixing, music aesthetic/design, sound-design, etc.) to that sound.
Plus, I've never ever encountered a musical scenario solved by pre-made loops that wasn't better solved by just writing an original part.
The only time I've used sampled loops for a real gig was an instant mistake...
I was working on the music reproduction for the Special Edition of Monkey Island 2, I bought some jazz kit libraries for the gig knowing that I would have to do some kind of jazz thing. Unfortunately, the original drum work throughout the game was fairly simple and while that worked well in a totally MIDI sound environment, it was not only extremely sparse but also kind of inappropriate for the genre when played sounding like acoustic band instruments. One of the first cues I had to work on was a Mardi Gras piece on Booty Island. The original drum-work was really super sparse (especially for that style of party music) and the tempo was really slow. Feeling really nervous about delivering something that would sound acoustic (and of course knowing that the fan-base was rabidly demanding when it came to recreating their favorite game) I grabbed a couple of jazz drum loops and edited something together that seemed appropriate.
Jesse Harlin, the Music Supervisor at LucasArts at the time sent the piece right back and was like "what's going on with the drums? This sounds weird."
Loops just don't make sense when you're writing for something specific--which you should always be--unless the music is built around or specifically about the content of that loop.
I'm so glad he sent it back to me.
At that stage, I knew there was nothing I could do but study. So, I watched hours of Mardi Gras bands playing sets on YouTube and paid specific attention to not just the drumming, but the drummer. I wanted to see when the drummer was bored, when the drummer was having fun, I wanted to see when the drummer was listening to other instruments, and what the drummer did when they knew they could do something fun--I noticed the really good drummers were creative about what they would bang to get interesting fills.
The redo of that track has a drum performance that while a bit too fast/accurate/quantized for a real drummer, is still a drum performance I'm proud of:
You just can't get that from loops, especially the B section of the song where I make the drummer solo on his bells and stands etc.
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This IS a supply and demand issue. The problem, whether you like it or not, is that music is a result of our biology and physics. Everyone has some kind of musical potential simply because they are human and as mentioned by a game developer earlier in this thread, there is not a need for the same kind of workload--there ARE fewer jobs than there are people qualified for those jobs.
We can blame the people who hock themselves for super cheap, we can blame the technology for allowing so many musically inclined people to access a mid-to-decent production polish, but the reality is one: either you're cheap to get cheap jobs or those employers weren't for you anyway; and two: get better, always get better.
There will always be competition, and there will be more competition in the future. Distinguish yourself and be entrepreneurial.
I do not know any music composer working today who doesn't also do one or two OTHER things for money. Even people engaging in the traditional music industry are having these problems.
Nathan is right when he says there is work out there, there IS work out there, but you will always have to be better, know more people, and look more talented than someone else to get it. Be creative about how you make money, and you will make money or don't worry about making money, and let go of your need to have music be your bread winning job.