By rights it should have been an early victim of the recession. A small Scottish firm selling high quality, luxury equipment, beyond the budget of the average shopper — surely it could not hold on when the rest of the world was tightening its belt.

But, it seems, quality pays. Linn Products, maker of eye-wateringly expensive home sound and cinema systems, has defied all conventional wisdom by posting a 40 per cent increase in profits.

Luxury products such as sports cars have seen sales slump dramatically during the recession. But despite selling sound and vision equipment costing up to £12,000, Linn, whose factory at Eaglesham south of Glasgow employs 150 people, has seen its sales hold steady and profits rise. The performance is mainly due to the decision a few years ago to produce a high quality sound system for playing music downloaded from the internet.

Now their digital sound system, which retails from £995 up to £11,400, is a big seller. Gilad Tiefenbrun, Linn’s managing director, said: “Over the last two years they have gone from zero to being 25-30 per cent of our sales.”

The boost has more than made up for a big decline in CD player sales and helped sustain company revenues of £16.2 million for the year ended June 2009, which were about the same as the previous year.

Mr Tiefenbrun says that the history of most recessions has shown that they produce an increase in innovation with the companies most able to exploit development being the ones to cope best.

He added: “In the boom times, people bought a Porsche because they wanted to show they were keeping up with their neighbour who had a Porsche. In tough times, people are making more considered purchases. They are looking more closely at their own environment and in bad times people are interested in how they can improve their home and lives rather than following the latest trend.”

Linn has marketed itself on selling “life-changing” sound systems and Mr Tiefenbrun claims its digital system produces a sound which exactly reproduces what artists record in a studio. “It has all the highest highs and the lowest lows which ordinary equipment cannot reproduce,” he said.

The company is also beating the phenomenon of pirate and cheap legal downloads of music which is wreaking havoc in the rest of the music industry.

Linn Products now has its own record label which specialises in what Mr Tiefenbrun calls “studio quality” recordings of classical and jazz music. He claims that the difference in quality between these recordings and what can be played on a standard MP3 player is the difference between hearing a live concert and hearing the same performance wearing ear muffs. The company sells its “studio quality” recordings for about £18, alongside CD versions for about £10 and an MP3 digital recording for about £5.

“People thought that the studio quality sales would be about 5 per cent of total sales,” said Mr Tiefenbrun. “But now they are about 70 per cent, CD sales are 20 per cent and MP3 sales are 5 per cent.”

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