Preschoolers can’t understand the difference between content and ads on a website and like to shop despite the fact that money is an abstract term. Parents don’t mind straightforward advertising, but they can’t abide sites that try to blur the line between the two. Those are just two of the takeaways you’ll find in the new study, “Like Taking Candy From a Baby: How Young Children Interact With Online Environments.”

Warren Buckleitner, founder of the learning lab Mediatech Foundation, teamed up with Consumer Reports WebWatch to author a compelling observation of the youngest of the Internet crowd, kids ages two through eight. The study tracked families with kids ages two to eight while their kids visited 21 specific kids’ websites, including popular favorites like Bratz, Club Penguin, BarbieGirls.com, and others.

What they found is not a surprise for those of us who’ve been on sites where young kids surf and play. But, if your kids are playing and you haven’t visited, let this be a cautionary tale.

One of the clearest findings of the study is that the Internet is a very commercial medium. (We suspected as much, but the study shows the problem from a kid’s point of view.) Kids are not equipped to deal with the decisions that the media presents.

Enticements to do the advertisers’ or sponsors’ bidding were many and varied. Some, says the study, invite kids to click on a temptation that whisks them directly to a registration page before they can go any further. Some let the kids create pets or avatars online but hold those creations hostage until the kids have ponied up a subscription fee. Most of the sites took a consumer-driven approach by offering various point systems where kids accumulate points or dollars that they can then use to spend on the site. And a number of sites required an offline purchase like a Bratz or WebKinz toy.

Particularly telling are the anecdotes and videos included in the report. These could be subtitled “When good kids click bad.” Stories of kids’ tantrums when parents say no, we’re not going to pay a subscription fee. Stories of kids all too willing to share personal information in order to enter a drawing or contest.

In a two-class world, sites are also segregating paying from non-paying members. There are tales of parents forgetting to renew their kids’ subscriptions and worrying that they’ll never regain their virtual property. Clearly, kids are dismayed when they’re having a good time on a site and are suddenly hit with a message saying, “you need to subscribe to play the next level.” Free games, like Addicting Games, have many different games to choose from; some are pure marketing and others may be downright inappropriate.

Realistically, websites need marketers the way a fish needs water. Without sponsorship or subscriptions there’ll simply be no play. And on the kids’ web you will either pay with your dollars or your willingness to interact with marketers.

The study goes on to offer recommendations for parents, developers, and policymakers on how to take the existing situation and live with it. The bottom line for parents is to understand that there is “no free lunch” on the Internet and that even the best sites for kids have their trouble spots.

Visit ConsumerWebWatch http://www.consumerwebwatch.org/pdfs/kidsonline.pdf for the full monty.