One Dunedin venue manager said if they got another noise complaint it could "wipe out" all their gigs for the following week.
It comes after the government this week unveiled its overhaul of the Resource Management Act (RMA).
If adopted, the maximum penalty for non-compliance with an excessive noise direction would increase 50% to $15,000.
Excessive noise directions can be issued by enforcement officers after receiving a noise complaint, which prohibits further emission of excessive noise from premises for a period thereafter.
Disobeying this direction is punishable by a maximum fine of $10,000 at present.
Save Dunedin Live Music spokesman Dave Bennett said the proposed change was "very concerning".
"That kind of fine could easily destroy a music venue.
"A fine that big, $10,000 to $15,000, is enough to literally, if not put a music venue out of business, then scare a bar off from doing live music altogether."
The maximum penalty was already too high and increasing it raised the risk of putting venues out of business, Mr Bennett said.
Another recent law change was also significant.
In late August, the government amended the RMA to expand the prohibition period for further excess noise.
Premises had previously been prohibited from producing excess noise for a period of 72 hours or less, from the date the direction was given.
The amendment extended this to a period of eight days or fewer.
"That’s a change that could kill venues," Mr Bennett said.
"It’s untenable for a business to be able to operate under the threat of that kind of enforcement."
That, along with a potentially larger fine, was "not a good omen for the future".
"It seems that an industry that’s already struggling is facing the potential for much harsher penalties on their activities, which could lead to the death of live music in New Zealand, at least at the grassroots scene."
The government was "not paying enough attention to the collateral damage these kinds of changes can have on industries like music," Mr Bennett said.
In September, then three-month-old Dunedin wine bar The Cellar was hit with a noise complaint just before 7pm on a Sunday.
The bar’s wine manager, who declined to give his full name, said they did not trade for the next 72 hours.
"Eight days — that means we have to wipe out almost the next whole week’s venue."
He knew of some venues in Dunedin that could handle such a fine, but it was "scary money" for independent, privately-owned ones such as themselves, he said.
RMA Reform Minister Chris Bishop said it was worth noting the proposed fines were maximum fines.
They had not been increased in 20 years and the actual fines issued were often lower than that.
"I can assure people there is no intention of making live music harder.
"In fact, the reality is the opposite — many of the government’s proposed changes to urban development national policy will make for more liveable and more vibrant cities."
Dunedin City Council compliance solutions manager Bonnie Wright said they did not expect a change in infringement values to have a significant impact in the city.
They were also yet to see "any noticeable change" from the introduction of eight-day notices.
