The easyJet plane streaks low over Playa d'en Bossa in Ibiza. Its lavish beachside nightclubs are tantalisingly close: Bosch-like figures lit up in purple and white writhe beneath us. For prudes, moralists and the sleep-deprived, it's a nightmarish vision – Europe's sybarites diving into the inferno, plane after plane.

But for how much longer? Ibiza, a clubbing mecca for decades, should have been ideally placed to capitalise on the global explosion prompted by the US embrace of EDM (electronic dance music). It should be the gravitational point for the culture, especially considering, as one hippy tells me with sombre awe: "It's the third most magnetic place in the world." And yet last year's Ibiza season saw the island fumble the ball, programming too many trendy underground house and techno events that spread talent too thinly. Middle-league DJs attempted lavish events, like Guy Gerber's Wisdom of the Glove, a night featuring shadow puppetry and a £150,000 metal glove hovering above the dancefloor; his new venture Rumors didn't even make it past the launch party this season.

Meanwhile, EDM festivals such as Electric Daisy Carnival in Milton Keynes are providing big-budget mainstream dance for a fraction of the price of an Ibiza trip, and the festivals that fringe the Croatian coast such as Hideout and Dimensions, cater to the underground with similarly good value and a Mediterranean setting just as gorgeous as Ibiza's. Las Vegas is booking dance acts with gusto and hoovering up the VIP market, while squabbling between the underground and the mainstream has broken out (most vividly with underground DJ-producer Seth Troxler calling DJ Steve Aoki an "overpaid, untalented, cake-throwing, performing monkey"). Ibiza's DJs and nightclub owners are now scrambling to safeguard the island's future.

"It was a total war to fill the venues," says Yann Pissenem of last year's difficulties. Butch, tan and smiling, he's the founder of Ushuaïa, a beachside superclub and hotel that hosts high-budget alfresco evening parties. "We thought this 'underground year' was happening and it was not the case. EDM has grown all over the world, this industry took over the concert, and now God is a DJ. It's totally aspirational for the kids to be a DJ." This year he has changed tack, embracing the mainstream by booking EDM stars such as Aviici and Hardwell, plus a new residency from two members of Swedish House Mafia, Departures. In one of their many hagiographic docu-selfie films, Departures' Sebastian Ingrosso once promised to "fuck this club in the pussy", and this violent, crass – and straightforwardly enjoyable – dance music is a world away from Ushuaïa's previous techno-focused residents Loco Dice and Luciano.

"If I want to make an underground party, I can do it in my garage with a few friends; Ushuaïa is a business," Pissenem says. He points out that fans of hip techno don't spend much money in his club, whereas the global super-rich from China, the Middle East and Russia do: €10,000 a night to stay in Ushuaia's top suite, to be precise. As I walk around Pissenem's vision of "an amusement park for adults", early-20s ravers fringe the pool while sugar daddies relax with premium vodka in ice buckets, as Armin van Buuren plays a trance remix of Let It Go from Frozen.


Less than a mile from this heady kitsch, though lightyears away in aesthetic terms, is Sankeys, a club from Manchester that set up an Ibiza outpost three years ago. Its owner, David Vincent, had a €1m of financing fall through just before Sankeys opened, and maxed out his credit cards to keep it alive. He's still trying to tart the place up. "People keep slipping over on this," he sighs at the tiled dancefloor as we file into a bare-bones office space. "That first year, I had a whole season fighting off investors [demanding a return on their money]. Have you ever seen that scene in Airplane!, when the woman's screaming 'I'm gonna die!' and there's a queue of people with hammers and knives? I had that queue here." But thanks to a rejection of EDM and its no-frills décor, Sankeys Ibiza is carving out a sustainable fanbase. "We've pissed on our own little territory," says Vincent. "We're Manchester that's landed right in the centre of Ibiza. We represent that low-ceilinged, pressure-box atmosphere. These clubs are different rides, Ushuaïa is Disneyland and Sankeys is the ghost train." Like Pissenem, he says last year's season suffered from "too much supply and not enough demand; clubs like Pacha were trying to be cool, rather than be what they are".

While Ushuaïa's tack is big, shiny and expensive, and Sankeys is small, grimy and, well, still 30 quid to get in, a third approach to staying relevant on Ibiza is being taken by Richie Hawtin. As Plastikman, he was a key voice in Detroit techno in the 1990s. He has remained a mainstay on the scene ever since, parlaying his pedigree into his own weekly Ibiza party, ENTER., at Space.

If Ushuaïa is Disneyland, then ENTER. is the Science Museum, where you can create music yourself via interactive tables, drink sake in a Japanese-themed disco room, and see artists who have never been to Ibiza before: the dark, occult likes of Demdike Stare and Pye Corner Audio. You can see this maturing impulse among some of the other Ibiza old guard, too, such Manumission, whose owners have replaced the onstage copulation of the 90s with an open-air cinema curated by Samantha Morton and Lynne Ramsay.

"Ibiza doesn't need another party, another room filled with headliner DJs," Hawtin says backstage after his first set of the opening night. He will later play until 9am, but despite this constant nocturnal activity, the 44-year-old's skin sings with moisture and tone. "It needs concepts, themes, imagination. You're starting to lose the artistry and creativity of the DJ. The explosion of electronic music, especially in north America, means that they've taken the long mixes and compacted it into an hour of energy, of three- or four-minute songs. And they've taken it from late-night, and put it into concert halls where you go home by 1am." A self-appointed spokesperson for techno, he diplomatically adds: "But we can't forget that the music played in that context is a branch of our family tree, much more than rock music. We've all got to work together and open doors and put ladders up, and allow people to explore it all."

While it does host dancing girls in cages, ENTER. tries to set itself against the sexually fluorescent visual identity of the other clubs with its eye symbol, something Hawtin emphasises by DJing wearing a creepy black contact lens. "It's against all the other fucking billboards here; the worst thing to put on a billboard is a DJ's face," he says. "The eye for me is a connection to our humanity. Before you even come into the club you're already getting sucked into our world, into the black dot." He even has an elegant explanation for making sake such a feature of the club (aside from being able to flog €20 cocktails). "Sake is very minimalistic," he says. "Each family of sake brewers had their own water source and their own calligrapher, and they were distributing it themselves. I was like: 'This is like the fucking independent techno community that I grew up with!' I just had to go through my history and change 'music' to 'sake'. The 808 and 909 to rice and water."

ENTER. Photograph: Igor Ribnik/Visonhype

Unsurprisingly, sake comes fairly far down the intoxicants of choice on the island. Blokes mutter "MDMA, coke, crystal" at me on dancefloors, and I see clubbers recovering from the night before lining up coke with surprising languor at a hotel pool.

The drug culture claimed an impressionable pair of UK students last year, jailed in Peru for attempting to smuggle cocaine back to Ibiza. This year, the "bath salts" school of designer drugs have arrived, triggering a handful of violent incidents. "PRs are selling tickets for commission – they can't survive on that," says Vincent of the squadrons of young party promoters. So some may sell drugs. But Vincent still argues that "dance music would probably be lost without drugs. Do I condone the use of drugs? No I don't. Does it help the vibe of a club? Of course it does."

A confused sentiment, but then moral ambivalence and blanket denial of reality is perhaps what ultimately sets Ibiza apart from the competition. This is an island where as Hawtin says "you are so far away from your reality that anything goes", and whose fabled magnetism really does exert a powerful pull on the world's dance fans.

"I'm hanging out my arse, mate," says Bradley Ashley, an ENTER. punter from Liverpool. "I've spent a grand in the last three days." So why does he come to Ibiza when it's so expensive? "The things that are getting shown for the next 12 months of the clubbing calendar – if you come here, you get a premonition." "And the women are amazing, you can't get away from that," chips in his brother Tom.

The magnetism also affects the people running the place. Pissenem grew up putting on raves in the French countryside before a decade in Barcelona's post-Olympic boom, he was finally drawn to Ibiza to make "a little beach club serving juice" that, in the end, became an EDM fun palace. Hawtin spent years in the booth at the seminal techno night Cocoon, and raves about the island as "a magical playground of crazy flowers of electronic music". The night before ENTER., he went out and somehow sustained a black eye. Vincent meanwhile professes to only go out once a week, though hours later I see him stumbling down the street, his face covered in fluorescent paint following an impromptu boat party. My taxi driver to the airport tells me he "came from Antwerp for a party 14 years ago, and never went back". And as the plane flies back over the terrace at Space, its roar mimicking and augmenting the musical and chemical rushes below, Ibiza's surreal glamour feels pretty hard to let go of.

Ben Beaumont-Thomas's trip to Ibiza was paid for by ENTER.