In The Business of Children’s Entertainment, Norma Pecora describes the business model that led to the dominance of cartoons in children’s TV in the 1980s and 1990s. Starting in the early 1980s with shows like the Smurfs, Carebears, and He-Man and the Masters of the Universe, television production companies increasingly partnered with toy producers in their shows. The main goal of this, Pecora argues, was risk management: if Mattel commits ahead of time to merchandising (and buying advertising for) the characters in your show, there’s a lot less risk in producing new shows for kids. Cartoons make merchandising a lot easier, too. It works better to make a toy, doll, or action figure based on a drawing than on a live-action character. (You avoid some uncanny valley issues, at minimum.) And the specific sorts of cartoons that started to be made—He-Man, G.I. Joe, Thunder Cats, My Little Pony, Care Bears, Teenage Mutant Ninja Turtles, Smurfs—had basically unlimited casts of characters. That way, there is no ceiling on the number of toys you could market, and you can build on the “collecting” practices that kids already participated in (baseball cards, Barbies…).
So Pecora points out that in the 1990s, Nickelodeon, which had started out as a non-advertising-based channel that conscientiously avoided some of the more commercial practices of children’s media, including emphasizing live action shows like You Can’t Do That on Television in at the core of its lineups, had shifted much of its programming to cartoons (Ren & Stimpy, Doug, Rug Rats, SpongeBob SquarePants, and quite a few others), because that was the successful model (p. 93ff). The same dynamic is true even for public broadcasting, and by the 1990s kids’ shows on PBS were geared toward marketing opportunities.
But Pecora also points out that cartoons are only appealing to certain groups: boys and younger children (p. 83). (Moderately) older kids express preferences for live-action game shows and dramas, and older kids are definitely an audience that television companies want to attract.
I think this is a major part of the background that explains the explosion of live-action shows with strong music tie-ins in the oughts (especially beginning with Hannah Montana and High School Musical). Tween-aged girls are especially interested in popular music among child age groups, and they prefer live-action shows. That cartoons are not attractive to them was a problem that children’s media professionals were aware of and struggled with.
Music, then, provides a hook for cross-marketing and merchandising of live-action shows. And that’s what happened: the soundtrack to the first season of Hannah Montana was a top-ten selling album in 2006, the tour in 2007 was a big deal that also lead to a popular concert DVD, karaoke decks,
karaoke CDs and karaoke video games, and of course lines of clothing and toys. Disney has always been especially horizontally integrated, and its business model has long involved cross-marketing of its long-running properties (so the Disney Channel always emphasizes Mickey Mouse and other classic Disney characters and franchises). But Cyrus pushed this even further, as “the first artist to have deals with four areas at the Disney Co.: TV, film, consumer products and recording” (Variety)
And now almost every live-action show on the Disney Channel has a music tie-in, and stars of non-musical shows like Selena Gomez of Wizards of Waverly Place produced music.1 Nickelodeon struggled to catch up, but even in 2007 Drake and Josh’s Drake Bell’s record It’s Only Time sold reasonably, and iCarly’s Miranda Cosgrove eventually started making music, and now even Nick Jr is now specializing in music television for younger-than-tween kids: The Fresh Beat Band is currently selling tickets for its summer tour, and Yo Gabba Gabba! did the same in 2011.2
So why was the Disney Channel right there are the center of this tween music explosion? At least in part because tween music was a way to make merchandising for tween television possible, and Disney had been banging away on that problem for a while. (Hannah Montana was originally conceived as a show about a TV star, not a pop star, building on the success of shows like That’s So Raven and Lizzie McGuire.) But the music format that they stumbled onto with Hannah Montana and High School Musical in 2006–2007 proved to support a very similar sort of merchandizing and cross-marketing that made television for younger kids both profitable and low-risk propositions.
1I can’t not link to this amazing post by Voyou about the surprising anti-perkiness of Gomez’s character Alex on Wizards.
2The success of music programming on Nick Jr seems to complicate my thesis linking the business model of tween music shows with cartoon shows for younger kids. To some extent younger kids’ television, especially more educationally oriented shows, has always been highly musical, so this new emphasis is a natural fit. And there’s a backlash against the product-placement style shows, and it’s possible that these music-based shows, even though they’re still supporting lots of merchandising, manage to sidestep the existing skepticism about a cartoon model that’s been around for 30 years. The Fresh Beat Band website has a banner that says “You’re kids are learning while they watch!”:
Tyler Bickford 
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