I know that people sometimes criticize the Grammys for being not quite attuned to the "real world," especially in the genre categories, but most readers of this site would probably look at this year's list of kids music nominees as being more familiar and representative of the year in family music than the list of Top Kid Audio (as Billboard calls it).
The Top 25 list is headed up by Kidz Bop 18 and followed up by... er... Kidz Bop 17. Kidz Bop gets a total of 4 albums on the list. Disney gets a stunning 15 albums on the list, including 3 Hannah Montana-related disks (one being a karaoke disk). Add a couple Nick/Viacom show soundtracks, the Chipmunks, Charlie Brown Christmas, a Cedarmont Kids album, and a no-name collection of kids' Christmas sing-along songs, and what you're left with in terms of what you might think of as an actual independent artist hitting the charts is, er, nothing.
Now that's not entirely true. One of those Nick/Viacom soundtracks is Music Is Awesome, Vol. 2, the Yo Gabba Gabba! collection, though it could be argued that that's just a college rock album marketed slightly differently. The other album is They Might Be Giants' Here Comes Science album, which has spent a whopping 52 non-consecutive weeks on the Kid Audio chart since its release in September 2009. But it could be argued that TMBG's other fan base helps out considerably as does Disney's distribution power, which no doubt helped get the album in places most kindie artists can only dream of.
Compared to last year, the genre didn't do appreciably better when compared to the industry as a whole, given that 3 of the Top Kid Audio albums charted in the Billboard 200 in both 2010 and 2009. But the broader issue is that it's impossible to fully measure the genre's impact. I wouldn't be surprised if Justin Roberts' Jungle Gym (which reached as high as #10 and spent a couple weeks on the Kid Audio chart is being underreported if a lot of his album as sold via toy stores, for example, or at Justin's shows (I don't know if he's self-reporting to SoundScan). And Laurie Berkner's Best of... must have just missed the cut-off, because her album spent a full 3 months in the Kid Audio Top 10, and has spent 28 weeks there total since being released in late June.
One wonders, however, whether kids' music would have wider visibility in the industry if it figured out some way to better quantify all the albums being sold (or if SoundScan reduced the fee to become a reporter). I would guess that the percentage of "unreported" sales is higher in this genre than in others, and that maybe a few more artists (rather than TV and movie soundtracks) might squeeze their way in were those "unreported" sales finally reported.