Sales of digital music are going through a mini-boom as legislation outlawing free downloading starts to bite.
And more musicians are going it alone as they realise big labels are struggling and social media is making it easier to get publicity.
Sales of recorded music in New Zealand represented $65.4 million annually at the end of 2010. That was just over half the $120.8 million they were worth in 2003.
But Anthony Healey, Australasian Performing Right Association (APRA) director of New Zealand operations, said the industry was on the cusp of major change as laws passed last year to combat piracy began to take effect.
"New Zealand and Australian digital music sales were growing at about the same rate, but since September, New Zealand's have been growing 40 per cent faster than Australia's," said Healey.
Mark McClung of Sony BMG agreed: "Over the whole market, with all the labels combined, there has been a change."
Statistics showed the number of album sales by New Zealand musicians, digital and physical, was up 48 per cent in the third quarter of last year on the same period the year before - the first quarter that the legislation affected.
The sale of digital singles by New Zealand musicians increased to 154,205 for the quarter, compared with 146,527 the year before.
A snapshot of sales last week showed that in 24 hours, the highest-selling single on iTunes, Is Anybody Out There by K'Naan and Nelly Furtado, was bought 310 times for $1.79 a download. iTunes represents 70 per cent of digital music sales worldwide.
Singer Sarah Brown said musicians could expect iTunes to take 25 per cent of the sale price, which ranges from 99c to $2.39. A major label might then take another 25 per cent.
Healey said the growth in sales could be attributed to the legislation. People accused of internet piracy could be fined up to $15,000 after receiving their third infringement notice.
Telecommunications companies had noticed a drop in peer-to-peer internet traffic at the same time, he said. "The market is back almost into growth. It hasn't been that way for a long, long time.
"The growth in digital music sales is outstripping the drop in physical sales."
Healey said with online streaming services such as Spotify moving into the market, there were more avenues for New Zealand musicians to generate revenue. But he said most would not be able to make it their fulltime job.
"And you can't just rely on selling recordings. You need to be out there, playing live, getting sponsorship or third-party investment."
Agent Matt Coleman said with a major label, artists could risk being given an advance of $10,000, only to sell 50 records and be left with the label owning the master recording. But records were cheap to make. "The Avalanche City album was recorded for $25 a day for a week in a country hall."
Other Kiwi musicians - such as Ben King of Goldenhorse, Mike Hall of Pluto and Gareth Thomas of Good Shirt - were working on independent projects. David Dallas gave away his second album free to generate exposure. Two years ago, the Mint Chicks left Warner Music for tiny online firm Musichype.
"When the major labels are investing less in local artists, you have to do it yourself," said Healey.
Sarah Brown has set up an independent label to market and distribute her next album. "The majority of New Zealand musicians are doing it on their own - the major labels are dying out a bit."
She had received $50,000 from NZ on Air and had to match that funding dollar for dollar.
If she were with a major label, she would not have to pay anything upfront but could be left with a debt if she was given a bigger advance than the album generated in sales.
"The amount you get back compared to what it generates is minimal. If I do well [on her own label], I'll get the full profit."By Susan Edmunds Email Susan