From a private balcony two stories above the stage, owner John Lyons watches as his Avalon nightclub fills with Friday-night partiers. An opening DJ duo, Riggi and Piros, is working the crowd with a mix of EDM hits and rock mash-ups. Riffs from Yeah Yeah Yeahs and the White Stripes mix with flashy, electro-house synths and an occasional blast of dubstep bass.

The crowd doesn't know it, but tonight is the soft debut of a brand-new sound system, the Avalon Club One series, co-designed by Lyons himself. Even up here in the rafters, the sound is amazing: crisp and well defined in its upper frequencies, with enough low-end whomp to rattle the ice cubes in your drink. Yet when Lyons speaks, his voice cuts through the music easily, barely rising above a conversational tone.

Innovation — on both sonic and artistic levels — is why, 12 years after Lyons bought crumbling rock club the Palace and turned it into a state-of-the-art EDM venue, Avalon Hollywood has become a phenomenon.

No matter what else is going on around town on a Friday or Saturday night, the club near the corner of Hollywood and Vine is packed.

Its splashy, red-carpet opening in October 2003 featured a three-hour Paul Oakenfold set and celebrity attendees Paris Hilton and Cameron Diaz. But Avalon's success was hardly a foregone conclusion. At the time, the neighborhood surrounding it was still a wasteland for nightlife. There were a handful of other nightclubs — King King, Nacional, Club Vynyl — but they were outnumbered by souvenir stands, porn theaters and vacant storefronts. Parking may have been cheap, but you wouldn't want to leave any valuables in your car.

The city's only other mega-club for house and trance, Spundae at Circus Disco, was down on Santa Monica Boulevard, next to a lumberyard. Spundae brought in marquee names such as Ferry Corsten and Armin Van Buuren but struggled to maintain consistent attendance.

“L.A. was kind of stuck in the hip-hop world,” recalls Erick Morillo, the veteran house DJ/producer, who will headline “The Grand Reveal.” The party on Saturday, May 10, will be the official unveiling of the new sound system, as well as new video installations, an additional bar in the lobby area and an expanded VIP section. “There were no dance parties that I remember other than Circus.”

Lyons, who had just moved to L.A. from Boston, where he had built a small empire of clubs and restaurants with his brother Patrick, was undaunted. “Everybody told me I was crazy to try to open a large nightclub in Los Angeles,” he says, nibbling on a fruit tray in his well-soundproofed office on Avalon's third floor. Back in the '70s, to save money on staff, he and Patrick often would work the door themselves at their infamous Boston punk club, Spit. Even today, at 58, he still has the burly physique of a man who could bounce an angry drunk without breaking a sweat. “They said that Los Angeles is not a large-nightclub town. It's a place where people go to parties in the hills. And I said, 'Well, can you tell me of a large nightclub that was done really well that has failed here recently?' Nobody could.”

Before Lyons bought it, in 2002, the Palace was a dump. Three decades of over-amplified rock concerts had taken their toll, rattling loose paint and bathroom pipes. In the summer it was sweltering, yet it was so cold in the winter that bands sometimes played with their coats on. But Lyons saw the potential in the historic venue, which had opened as a vaudeville and burlesque house in 1927 and played host to The Beatles' first L.A. concert (in 1964) and The Ramones' final show ever (in 1996). The sound, unfortunately, was “horrific.”

Lyons began listening to sound systems with a critical ear when he managed discotheques in the '70s. The tinny, unreliable PA systems of the day, he felt, never captured the music's full energy. “The first nightclub I ever managed didn't have sub-bass. It hadn't really been invented yet,” he says.

So he and his brother got creative. “We had a DJ playing records, and next to the DJ was a drummer with headphones on, drumming along to the music. “

When the first wave of electronic dance music was in full swing in the '90s, Lyons was designing sound systems for his Boston nightclubs, including the first Avalon, a midsized room behind Fenway Park. With speaker manufacturer EAW, he launched a line of branded Avalon loudspeakers; his company, John Lyons Systems, designs club lighting and visuals, too.

“I've never been one of those people that lost themselves on a dance floor,” Lyons says, “but the geek in me has always derived enormous pleasure and satisfaction from providing that.”

Lyons' speakers now can be heard in clubs all over the world — especially in Las Vegas, where he's installed systems in more than a dozen venues. They have the added benefit of making his Hollywood club a favorite among DJs.

British-born, L.A.-based Kevin Bazell, aka Kazell, an Avalon resident DJ, says even the club's old system “blows people away. I've got friends that come in from London and they're used to Fabric, places that have got legendary sound systems. But nobody ever goes away from Avalon going, 'That didn't live up to the hype.' ”

Progressive house DJ Markus Schulz, whose 13-hour New Year's Eve set at Avalon in 2012 is now the stuff of legend, puts it more succinctly: “Whenever I walk into a club for sound check and I see the Avalon system, I just smile.”

Within its first two years, Avalon had already booked Paul Van Dyk, Tiësto, Sasha, Pete Tong and Deep Dish — the biggest names in dance music at the time. It absorbed potential competitors, bringing in former Spundae partner Dave Dean as part of the development team that helped launch the club and eventually putting Dean's company, Giant, in charge of booking for both Friday and Saturday nights. (Spundae also was brought on as a partner after it left Circus but hasn't been involved with Avalon since 2011.)

Although Avaland Saturdays remain Avalon's marquee night, Friday-night party Control has become the club's lifeblood, nurturing up-and-coming, local talent in ways that have built an unusually loyal following for the venue itself. Many fans can remember seeing (or at least hearing about) Skrillex playing the 40-person side room in Control's early days.

The party started out small and scrappy, with out-of-town headliners who, at the time, had small followings in L.A.: Canadian EDM from Felix Cartal, French electro-house from Surkin. “We're lucky that we did it at Avalon,” says Ryan Jaso, who has run Control with partner Chris White since December 2008. “[Lyons] saw the potential. The club lost money on a lot of those shows. But the owner believed in it. Didn't want to do hip-hop, didn't want to do cheesy Hollywood mainstream parties. He wanted to have that Friday/Saturday one-two punch.”

Lyons thinks there's no reason that Avalon won't be around for another 10 years. “Everybody says clubs don't last. You're never gonna last more than six months, a year, two years. Well, we're in year 12 and we've had year-over-year growth for all 12 years.”

As for the explosion of new nightclubs up and down Hollywood Boulevard, the clubs that have followed in Avalon's wake? “I really don't pay attention to it,” he says with a smile, as the faint thump of an electro remix of “Seven Nation Army” bleeds through the soundproofing. “I genuinely believe that my only real competition is within my own four walls.”

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