In January 1997, Deadstar appeared on the Big Day Out tour. In August that year they issued their second studio album, "Milk", which Palmer co-produced with Kalju Tonuma (Nick Barker, The Mavis's). McFarlane felt the album contained "garagey pop gems". In Australia two singles were released from the album, "Don't It Get You Down?" (September 1996) and "I've Got Something to Tell You" (June 1997). Both singles were co-written by Jones, Kennedy and Palmer. In the UK they issued "Sex Sell" as their lead single from "Milk" (titled "Deadstar" for the European market) on Discordant Records. At the ARIA Music Awards of 1997 "Don't It Get You Down?" was nominated for Best Independent Release. Late that year Nick Seymour left Deadstar and was replaced on bass guitar by Pete McCracken – Kennedy's bandmate from Plum and her future husband.