Updated Aug. 7, 2014 11:15 p.m. ET

LITITZ, Pa.—This town of 9,400 people in Amish country tells the story of the modern concert industry.

In 1968, when Frankie Valli and his group rolled in for a show, two young brothers who did sound for local dances turned the Four Seasons into one of the first music acts to tour with its own speaker system. The brothers built a reputation on the road, but they never moved out of Lititz. Their company became an anchor for a cluster of businesses that now supply the sound and spectacle for many of the world's biggest acts.

The effect that lets pop-star Katy Perry soar over her audience while clutching a bunch of balloons. The battalion of speakers blasting Paul McCartney's voice in stadiums designed for sports, not music. The sliding catwalk that takes a singing, dancing Justin Timberlake from the stage to the rear of an arena. All this gear, currently crisscrossing America in tractor-trailers, was engineered and built in Lititz, along with the apparatus for blockbuster tours of the past by U2, the Rolling Stones, Madonna and Michael Jackson. The place has an air of secrecy: Because entertainers want a surprise when the curtain goes up, much of the work here is done in secret by companies that don't put their names on their buildings.

Once wired with tinny speakers and harsh lights, the world of live entertainment is now powered by computer systems that control sophisticated video displays on sets worth tens of millions of dollars.

The technology has been accelerated by the Darwinian forces of the music business. Concert tours, once used primarily as a way to get fans to buy records, have become the backbone of the industry after those record sales collapsed. As performers rely more heavily on their road earnings, they are now forced to tour more frequently and amp up the fireworks. Purists may see this as garish smoke and mirrors, but when you're performing in venues with 50,000 seats and no roof, you've got to do something.

To keep filling seats, these artists need the wizards of Lititz (pronounced LIT-itz) more than ever. The top 50 world-wide tours accounted for sales of 24 million tickets and a gross of $1.65 billion during the first half of 2014, according to Pollstar. One Direction, performing this month before wall-to-wall video screens in U.S. stadiums, grossed $131.5 million in ticket sales. The Rolling Stones brought in $115.1 million. Total revenue dropped 10.8% from last year. The decline could reflect some fan fatigue, or the possibility that more of them are gravitating to music festivals, or that many successful smaller acts aren't counted among the top 50 tours.

This quest for road supremacy has led to a boom behind the scenes for the makers of concert machinery, who get paid regardless of whether a tour is a smash or a bust. Lititz is now home to a dozen companies that serve the live-entertainment industry.

Two companies formed this unlikely hub: Clair Brothers, founded by Gene and Roy Clair, and Tait Towers, founded by Michael Tait, an Australian who was handling lighting for the British band Yes in 1978 when he joined the Clairs in Lancaster County. These neighboring firms specialized in different sides of the business—sound vs. staging—but grew up together. Not counting their employees in Los Angeles, New York and cities overseas, the companies now employ 750 people in the Lititz area, more than three times the size of their local staff a decade ago.

Now the two companies have joined forces on a plan to not just equip rock stars, but to actually lure them to Lititz. Later this month, Clair and Tait will open the Rock Lititz Studio, the largest dedicated rehearsal space in the world, the partners say. A hollow cube erected on a former cornfield, the 100-foot-tall, 52,000 square-foot building was designed to host the industry's biggest stage productions. It was built for $7 million, including a $3 million state grant.

It won't be the first time Lititz has hosted tour rehearsals. In the early 1980s, the two companies had a studio downtown where rock stars prepped for the road while staying under the radar. Michael Tait tells of Bruce Springsteen rolling down the window of his limousine to ask for directions, only to be informed by a local that the location was a secret. They closed the studio after about five years when the bands outgrew it. "They started going into airplane hangars and coliseums," Roy Clair says.

The demand for the new building is a direct result of the arms race in touring. Within the last five years or so, concert technology has grown so complex that crews need up to six weeks of technical rehearsals—before the band even shows up—to ensure that all the pieces fit together and work in sync. Typically that process takes place on an expensive sound stage in New York or Los Angeles, or in a rented sports arena, where the crew is often forced to clear out for other scheduled events.

"There's nothing worse than going to an arena and having to work around a game or a graduation, loading out and then loading back in," says Jake Berry, a seasoned production manager for acts such as U2 and Madonna. "There's a whole bunch of us old timers who really hope [Rock Lititz] is a success, because it could be the answer to our prayers."

He speculates that rehearsing in rural Pennsylvania could save a tour thousands of dollars a day in labor, lodging and other costs. For example, a crew can quickly get equipment from suppliers in Lititz if something–inevitably—goes wrong, instead of having to rush replacement parts by truck or plane to a distant rehearsal facility. U2 was supposed to be Rock Lititz's first occupant, Mr. Berry says, but the band's forthcoming album and tour have been postponed.

Unlike most ersatz rehearsal halls, Rock Lititz Studio was designed for concert hands. A grid cut into the floor aligns with a lattice of steel girders on the ceiling, so workers don't have to crane their necks to figure out where to hang their lights. For personnel accustomed to the concrete bowels of hockey arenas, the new facility is an upgrade, with an airy dining hall and dressing rooms with big windows, reclaimed wood and furniture built by a local artist are an upgrade.

Some design suggestions from industry veterans sprang from the more mundane needs of the crews. "They said, 'Don't mess up the catering and don't mess up the wifi. When all the guys are on Skype with their girlfriends, make sure the production manager can still get online,'" says Rock Lititz general manager Andrea Shirk.

The owners still face one problem: Where will the stars stay in a rural region where four-star hotels are rare and Amish buggies are still a frequent sight?

"It would be a hard sell," Mr. Berry says, noting that there are potential workarounds. "If you have enough money you can helicopter in and out of New York in 35 minutes."

Originally settled as a refuge for Protestant Moravians from Europe, this town nine miles from Lancaster is a quaint mash-up of old and new. The Wilbur Chocolate Company, which introduced its Buds chocolate drops in 1894 (13 years before Hershey's Kisses), is still here. America's first commercial pretzel bakery, Julius Sturgis, opened in 1861, is still selling snacks.

Clair and Tait renovated the "penthouse" floor of the 18th-century General Sutter Inn, adding rock 'n' roll flair—lamps made from microphone stands, tables built out of road cases—for their visiting crews and clients. Downstairs is the Bulls Head Public House, a British pub frequented by staffers, some of whom also favor the Toy Soldier, a nearby dive bar with an apartment upstairs that visiting crew members rent by the week.

Down a hill from Clair's headquarters and the Little League baseball field that the company has maintained for 17 years, Rock Lititz is taking shape on 96 acres of farmland that the partners recently purchased for a planned $100 million campus. They expect to break ground soon on a building that will house other live-entertainment vendors. Those tenants would join an established business cluster in Lititz that includes the 20-year-old Atomic, which creates the look of events for such clients as Nike.

The stakes are higher than ever for big tours, which typically haul about $1 million worth of gear in every tractor-trailer. Katy Perry is currently traveling with 29 of them. But the spirit of one-upsmanship behind these market forces isn't any different than it was when the Clair brothers caught their break in 1968.

The Four Seasons hired the Clairs (for $90 per show) immediately after playing a gig in Miami, where the group had to plug into crummy house speakers while headliner Herb Alpert used his own superior-sounding system. "The Four Seasons had played for six years before that and never considered carrying a sound system until Frankie Valli saw Herb Alpert with his," says Roy Clair.

As the Clairs branched out to work with rock bands, such as Jefferson Airplane and the Grateful Dead, they went after equipment that could provide ever-more power and clarity. However, they also improved the tedious process of handling gear by the ton.

Up until the mid-1970s, heavy speaker cabinets had to be lifted manually and stacked on platforms. The Clairs asked a local Mennonite machinist to fashion a mechanism that allowed crew members to quickly hoist and hang speakers. The first of them to be road-tested featured white cabinets—by request of Rod Stewart, who took the hanging speakers on his final tour with the Faces.

In 1975, Mick Jagger visited a Faces' concert in Los Angeles, part of his process of hiring the band's guitarist, Ronnie Wood. He also checked out their sound by walking the arena during the show with Roy Clair, the 71-year-old sound man recalls.

When the Stones traveled America a few months later, Ronnie Wood was in the band and the Clair brothers were running sound. A framed photograph of a packed stadium on that tour hangs over the desk of Troy Clair, president and chief executive of the company now known as Clair Global. Troy tagged along that summer with his dad, Gene, who let his son man the console briefly when he took a bathroom break at Madison Square Garden.

"A 15-year-old from Lititz on a Rolling Stones tour? It was an eye- opener," Troy says.

When it came to stage theatrics, audiences were easier to impress in those days. "A bit of dry ice and a mirror ball, and you'd think I brought the world down," Michael Tait recalls of his techniques for Yes in the early 1970s. MTV changed all that in the 1980s. Suddenly, the stars' live shows had to compete with the images in their music videos, and production budgets soared.

In the halls of Clair's headquarters, gold and platinum records decorate the walls—remnants of a bygone era of booming sales when even a sound man shared in the glory. After Gene Clair died last December at age 73, Elton John dedicated a performance of "Candle In the Wind" to him at Madison Square Garden.

During the peak summer touring season, the company's equipment and crews are involved in up to 125 concerts a day. "Business is booming—ever since my kids' generation completely ripped off the record industry," says Troy. Two of his three children work for Clair.

Down the road, Tait's rise has been even more pronounced. The company is doubling down on business outside the touring industry. Recent jobs include a spinning video display in the end zone at the Dallas Cowboys' stadium; technology upgrades for the Metropolitan Opera; and Disney shows such as Broadway's "Aladdin," which features a Tait-designed flying carpet.

The company once sold its creations to touring artists, but as the productions became more complex and expensive, that model didn't work. Now, Tait leases its designs, which allows the company to custom-make the next big thing for some clients, then repurpose certain pieces for other clients on tighter budgets.

"We applied a real Lego-like system to the whole thing," says Adam Davis, who co-owns the company with Michael Tait and James "Winky" Fairorth. In one of their workshops recently, twisting staircases built for Tina Turner in 2008 had been attached to stage under construction for a coming fall tour. (Tait preferred not to name the star using Ms. Turner's hand-me-downs.) Nearby, plastic tarps covered a phalanx of robotic arms that were made for Bon Jovi—they later reappeared on stage at the Ultra Music Festival.

Tait occupies five buildings in the Lititz area. Oversized relics from past tours hang here and there, including the planes that crashed into a wall of collapsible cardboard bricks on Roger Waters's most recent tour of "The Wall." Workers with blowtorches recently assembled an aluminum stage for MTV's upcoming Video Music Awards. On the walls above them hung a 45-foot replica of a Rickenbacker guitar commissioned long ago by the Who.

"It never went on tour because by the time I finished it they said, 'Oh f—, we've got no more trucks.' It was all 'Spinal Tap' in those days—just guesswork," Michael Tait recalls.

Mr. Tait, who retired six years go, eventually did find a use for the massive prop: He mounted the guitar onto a car that put in a parade commemorating the 250th anniversary of his adopted hometown.

Write to John Jurgensen at [email protected]

Corrections & Amplifications

An earlier version of this article incorrectly said the population of Lititz was 940.