This refers to the echo and reverberations imparted by a physical space, as opposed to reverb generated by artificial means. Many audio engineers seek out great sounding physical spaces in order to take advantage of the natural reverb of the space when recording. While recording the natural reverb of a space doesn’t offer the kind of fine tuning control that digital reverberation algorithms offer, experienced recording engineers can use mic techniques and placement of instruments and baffles in the space to tailor their recording.
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