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Inspiration

Malon is both a new and old character at the same time. She is reminiscent of Marin from The Legend of Zelda: Link's Awakening, but she has her own identity. Like Marin, Malon is the daughter of a single parent, Talon (Marin has Tarin). They are both red-headed maidens who possess a talent for singing, a love for animals, and a sparky attitude when provoked.

New-age Songbird

Before Ocarina of Time, the songstress that graced the series was an island girl named Marin. Introduced to the series in 1993 in Link's Awakening for the GameBoy (and again in LA: DX in 1998 for the GBC), Marin was one of the first characters in the franchise to display a detailed personality. Originally depicted as a blonde, her design was altered to a red-headed girl in a blue dress.

Marin was based off of Princess Zelda, which allowed Nintendo to introduce a new female lead to the series while still retaining the familiarity of Princess Zelda. In the beginning of the game, Link even mistook Marin for the princess. Whether that was due to a familiar voice, a familiar face (this calls on the blonde design), or a subconscious yearning is still debated to this day. While Marin may be based off of Princess Zelda, it's fact that Zelda was based off of Princess Peach of the Super Mario Bros. series. This probably explains the presence of Marin's fiery attitude, a trait that Miyamoto invisioned in Princess Peach but was absent in early version of Princess Zelda. This is something that aids in creating a separate and unique identity for Marin.

A New Voice

The songbird character made a reappearance in Ocarina of Time as Malon. Instead of an island girl, Malon was depicted as the daughter of a rancher named Talon (based off of Tarin). These characters allowed for more familiarity while simultaneously creating new characters. They were references to older characters in both appearance and personality. In a sense, they were a gift to the fans:

"A father and daughter named Marin and Tarin that were introduced in Link’s Awakening for GameBoy also appeared in this Zelda game. We’re hoping that people who’ve played the Zelda series from the very beginning will recognize them. If you wonder 'is this a reference to then?' we’ll be happy." -Toru Osawa (OoT Script Director); SOURCE

Though Malon was a reference to Marin, she didn't initially start out with a voice. However, Miyamoto's love for country music caused him to change Malon into a songstress so that the horses would be attracted to her singing:

“I’ve always been a fan of country music, including people like Emmylou Harris, so I insisted on having a songstress in the game. I changed the ranch girl Malon into a songstress so the horses were attracted to her because of her song. However, this didn’t really suit her dialogue at the time. Originally we had her singing alone in the middle of the ranch, but halfway through we changed it so she went to the castle, but then she didn’t sing anymore. It was fun to consider those kinds of things.” -Shigeru Miyamoto; SOURCE