The Melbourne music industry has warned live music venues will close down unless more is done to protect pubs from noise complaints.

Long-running live music venues across Melbourne are feeling the pinch of gentrified inner-suburbs.

A single noise complaint from a nearby resident costs a pub thousands of dollars in noise proofing, which many venues cannot afford.

Guy Palermo runs the Bendigo Hotel in Collingwood; a hub for the city's punk and hardcore scene.

Until recently he operated the venue without major issue.

"First time we had a complaint was 10 months ago which was from the same tenant, who had moved into the area and was renting the place," Mr Palermo said.

"There are residents who are closer than this guy, he's gone now but we still have council on our backs and we're on the back foot."

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Victoria has the most venues in Australia: 600 Music contributes $500 million to the state's economy annually

Music contributes $500 million to the state's economy annually More people watch live music in Victoria than regular AFL games

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The complaints meant the local council had to step in and the hotel was taken to the Victorian Civil and Administrative Tribunal.

A last-minute deal with the council meant the Bendigo could keep operating.

"I don't think that one resident should be able to justify all that expense and the angst for any venue owner," Mr Palermo said.

It is a common complaint from venues owners and one that is threatening the viability of Melbourne's vibrant live music scene.

'Gigs could move to Sydney unless changes are made'

Dr Kate Shaw is an urban planning researcher at Melbourne University; she says the Bendigo Hotel is not the only venue dealing with complaints.

"It's a big issue, the population of Melbourne is growing rapidly and so is the number of complaints against music venues," she said.

Dr Shaw helped develop a live music action plan aimed at reviving Sydney's music scene.

The plan recommends building code changes, a review of the way offensive noise is defined and setting up a mediation process between venues and disgruntled residents.

Dr Shaw says Melbourne could learn a few things from Sydney.

She says if nothing changes, Australia's live music capital will suffer.

"I think the scene could move to Sydney, if the opportunities started opening up in Sydney and closing down in Melbourne it doesn't take much to shift," she said.

Venue owners say putting the onus on developers to build more soundproof homes will go a long way to preserving Melbourne's music scene.