Dueling distributors vie for children's music market

Vermont Business Magazine, Jan 1994 by Youngwood, Susan

Parents who wanted to buy their children a cassette tape for Christmas were confronted with a dizzying array of choices. There was an album of top hits from Barney, the purple dinosaur. The soundtracks from the Disney movies "Aladdin" and "Beauty and the Beast." Carol Channing reading chapters from "Winnie-the-Pooh." Even Jerry Garcia of the Grateful Dead recently released an album of children's music.

Thirty years ago, children had a slim choice of music to enjoy -- movie soundtracks and Burl Ives singing "Pop Goes the Weasel" were about the extent of the selection. Now, there are literally thousands of albums marketed for kids, resulting in a booming industry for children's music.

Two Vermont companies, Silo Music and Music For Little People, are the largest independent distributors of children's music in the country. They are not only benefiting from this expanding market, but they also have played a major role in the transformation of the children's music business.

"Central Vermont is the hub of the children's music distribution to alternative markets," said Will Forest, sales manager for Music For Little People. "Children's music pays my mortgage."

Despite the growth, children's music is still a very small percentage of total music sales. "We're a drop in the bucket compared to the whole industry," Forest said. According to the New York Times, of the $9 billion in album sales in 1992, children's music amounted to $4.5 million, or half of 1 percent. is fraction is an increase from 1991, when children's music sales came to two-tenths of 1 percent. One of the biggest artists is Raffi -- whose success translated into albums sold would be considered minuscule to most major record companies.

Like many children's performers, Raffi, the Beatles of the diaper set, started small -- singing in school cafeterias and selling his cassettes out of the trunk of his car. Although popular in Canada, he was practically unknown in the United States until Joan Pelton discovered him.

Pelton, who grew up in Waterbury, had played in a music group for fun while raising her children. She turned her interest in music into a career in 1975 when, at age 45, she got a divorce. She started buying records from small, independent music labels and selling them to stores; because the business' first home was in a barn, she named it Silo Music.

At first, Pelton specialized in new age music. While she was picking up albums from a company in Canada, she was shown a record by Sharon, Lois & Bram, a trio of children's performers popular in Canada. Pelton peddled the album to her customers in the states, and it took off. Raffi was the next children's artist she introduced.

"I bought children's music before the majors knew how to spell Raffi," said Pelton. "Children's music helped us grow. But maybe we helped the children's music business grow."

Although there seemed to be interest in children's albums, record stores ignored that segment and rarely carried the material, plus few parents felt comfortable taking their toddlers into record stores blasting Nirvana on the sound system. While clerks in record stores know the difference between Metallica and Bon Jovi, they are little help to parents deciding between Rosenshontz and Wee Sing. A different approach was needed to appeal to parents looking for music for their kids.

"A lot of young mothers would like to go into a more child-friendly place than a Tower Records," explained Ann Tangney, marketing director for Music For Little People.

Pelton decided to introduce the albums to alternative locations -- small toy stores, independent book stores and children's clothing stores. At first, many of these retailers said no.

"For Silo to thrive, we needed to create ... our own markets," said Dave Loveld, Silo's sales manager. "We had to convince the retailers to carry the music." Once in the stores, the tapes sold -- they were perceived by parents as a $10 toy. "We had a good reaction," Pelton said -- and thus came a revolution in the industry.

Silo now does $6 to $7 million in gross sales, Pelton said, and distributes 22,000 titles. About half of its business comes from the children's market.

The major record companies eventually noted the growth in children's music and now want a piece of the pie. Several major companies -- Sony and MCA are two examples -- started their own kids' divisions in the last few years. Warner Brothers Records, a division of Time Warner, now owns 49 percent of Music for Little People and entered into a joint venture with them in 1991.

"Because Music For Little People and Silo have done such a good job, the majors have responded," said Sarah Pirtle, one of the founders of the Children's Music Network, a group of about 1,000 children's music performers and others interested in the business.

Another reason for this growing interest in children's music is the aging of music industry executives. The people who used to market rock bands are now parents of young children

Because of the interest of the mainstream music industry, children's tapes now have a more visible section at chain stores like Barnes & Noble, Toys 'R Us and Kmart. Because they can buy in bulk and get better prices, these large stores can sell the product at lower prices than the small specialty stores.