"New York has the village, London has Camden, Austin has sixth street, what does Sydney have?" said 24-year-old musician Milan Ring. 

Once upon a time it had Kings Cross. But the building that once hosted Frank Sinatra now hosts Fratelli Fresh.

"The area has always been a crucible of live music," said Lord Mayor Clover Moore.  "As a young woman I remember sneaking out of my parent's house in Gordon after dark to listen to jazz in the Cross."

The plan to revitalise the cross could work in tandem with the live-music taskforce's ambitions to turn parts of the inner west into rock and cabaret-focused areas.

On Sunday, the Ignite festival will take over thirteen venues in Kings Cross in a bid to kick-start the precinct.

"Kings Cross is in trouble and we have to help it out," said the policy director of the federal government's live music office, John Wardle.

Businesses complaints were heard at a NSW legislative inquiry into the lockout laws on Thursday, with the threat to live music forming a central part of the committee's deliberations.

The committee recommended that the laws be reviewed at the "earliest possible stage," because of the impact on businesses, patrons and stakeholders. 

A submission from the City of Sydney said the laws reduce income to musicians, among Australia's lowest-paid workers, and have an impact on the diversity of options available to visitors and residents in Sydney at night.

A report from Deloitte in 2011 found that 92 per cent of patrons believed that live music improved quality of life. Eighty-four per cent said that it provided a welcoming and safe environment.

Triple J host KLP, who is performing at the festival, said it was about changing Sydney's attitude towards the area's nightlife.

"Kings Cross isn't evil, live music isn't evil, it's the perfect place for Sydney to start becoming more supportive of the industry."

In December, one of the world's biggest electronic music conferences, EMC, will take over the golden mile. Ten thousand guests are expected to see artists such as Steve Aoki in action.

One of the biggest concerns for musicians like Milan is whether the area can become a sustainable live-music precinct, not just an area for hosting one-off events.

Long-term change is under way. It is being driven by venues which see live music as the key to getting patrons into venues earlier.

"You need to give people a reason to come in at 8pm. If we all sit here waiting for the lockout laws to be lifted we will all go broke," said business owner Ron Creevey.

Global music powerhouses EMI, Universal, Sony and MTV are all now based in the area and struggling venues like World Bar and the Kings Cross Hotel are considering opening up rehearsal spaces for local musicians.

Big-name stars could soon call Kings Cross home again too. Underneath the infamous Coca-Cola sign lies the X-Studio, which opened on Friday.

It is Sydney's first all-in-one broadcast and recording studio with its own super club. The palatial green room is complete with a Jacobean knight standing sentry at the door and a round-the-clock butler service for the likes of Mick Jagger and Katy Perry.

Despite the promising signs, the live music office said there were still legislative challenges to starting a live music zone.

"In policy discussions, density is always a problem," said Mr Wardle. "But density is exciting. No one goes to Las Vegas because it has one casino, they go so they can go to a hundred."

He believes the state government's approach to funding live music has to change.

"We don't include local venues in events. There are no tangible economic benefits for music venues from the current model. Instead of having it in a park, lets put these events on inside venues."

Robyn Hall, a former president of the Kings Cross Residents Committee, said that residents wanted people to come into the community, "just as long as they understand that it is a residential area and respect the noise restrictions".

Ms Hall's comments are symbolic of the area's push towards high-density residential as the night-time economy struggles under the weight of the lockout laws.