"Making music on a quality instrument motivates and keeps the child interested in music. If you are serious about your child's musical success, a quality piano would be best"
Would you say that's true?
From a personal perspective, I found such to be true. As a young piano student, our family did not have the finances to buy a grand. So I was stuck with small Kawai vertical. I wouldn't say it was a "bad" piano, just extremely limiting. For the repertoire I was studying, Chopin Ballades, Scherzos, Etudes, Beethoven Sonatas, etc. that piano could be very frustrating as I felt that the instrument was not responding to all the effort that was being put into the music. When I would play on my teacher's beautiful Steinway (probably a model L or A) the experience was so much more pleasurable: I could focus on crafting expression as opposed to coercing the piano to play the notes.
That small vertical stayed with me through most of my university music studies, and I would say it did have an effect on my motivation towards piano study. For a time I was seriously considering switching my instrument to clarinet. For around $2k to $5k one could buy a clarinet of similar caliber to a Steinway Model B (a 7 foot grand). The prospect of playing an instrument where I did not have to wage a constant battle in order to achieve a desired expression was very attractive.
Eventually we were able to save up enough finances for a beautiful used Yamaha C3. I did find that instrument re-sparked my motivation to practice piano. Still play the clarinet too.
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Regarding the middle pedal. It has various functions depending on the piano. It may operate a practice mute, it may be a "bass sustain" working like the right pedal but only for a select bass range, or it may be a true
sostenuto mechanism holding select keys and operable throughout the entire keyboard. Sostenuto is usually found on grands, however a select few upper end verticals may have it implemented.
Various people may find value in each of these features depending on their scenario. People that need the option of quiet practice may seek the practice mute function. For me, it is the sostenuto function that is of interest. I play a lot of 20th/21st century and avant garde music, which may specifically call for the sostenuto in the score. Having the sostenuto on one's practice instrument is highly useful as it does take a good amount of coordination between hands and feet to get the desired effect. However, I don't really use the sostenuto pedal when playing standard repertoire such as Bach, Beethoven, Chopin, etc.
If you are looking at a grand, I would suggest one with a sostenuto as a preferred option. Most grands do have this so it is not something you need to hunt for, however some entry level grands may not have the middle pedal as sostenuto. Older grands may only have two pedals.
That being said, I wouldn't say a middle pedal is absolutely essential. I would rate a finely regulated proper una corda mechanism (left pedal) as more of a necessity than a middle pedal. One does use the left pedal quite a lot in the gamut of the piano repertoire, and a good una corda can contribute a sublime world of tone to the instrument. However, if you do foresee a current or future application for the middle pedal it would be wise consider it in your choice of instruments.
For my own personal choice of piano, I did take into serious consideration the sostenuto. My interest in the contemporary piano literature was a factor in guiding my own decision towards a piano that had one.
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And would you think a small grand's worth the extra $$$?
Without a doubt, yes! If you can afford a grand and you have the space, choose the grand. A large vertical will have a fuller tone than a small baby grand. However, the action on a grand is far superior in many respects to that of a vertical piano.
I actually find it uncomfortable to play a lot of verticals due to the position of the pedals relative to the keys. Verticals often have their pedals and bottom cover placed closer to the player. Thus when I sit in a proper position to place my arms and hands in alignment to the keys, my legs and feet are cramped too close. If I were to extend my legs to a comfortable length then my arms would be outstretched from the keys. Of course because of the back over, one can neither extend one's legs further under the piano. Grands generally have the pedal lyre located farther from the player, so that an adult of average height can comfortably position their arms and hands at the keys and extend their legs to an appropriate position. There is also no back cover to impede stretching out one's legs under the piano (of course one would not play like that, but it is good to stretch).
If your son is tall, the position of the pedals relative to the player does become an ergonomic issue. You want to be comfortable when spending long hours playing the piano.