Yes--it's true! You can make a microphone out of a paper cup, some magnets and some wire. It's definitely not going to replace any of my (or your) studio mics, but it's a fun lo-fi DIY project. Did I mention it was less than $10?
Have you built any microphones of your own? Do you have an experience repairing mics? Please share your wisdom and leave comments on how one might improve on this very basic (and hack-y) design!
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