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As the drumbeat for interactivity grows louder, more questions surround the issue of advertising's role in the process.

"The business models have yet to be established," said Nathan Myrhvold, senior VP-advanced technology at Microsoft Corp., at a New York conference last week sponsored by Wertheim, Schroder & Co. and Variety "Where's the profit? Will advertising play a huge role or a little role? Is distribution more important than content?"

"What is the new advertising model?" asked Michele DiLorenzo, exec VP at Viacom New Media. "How do you price it? What's the currency" beyond simple audience size? "How do you produce spots?"

Still others asked a more basic question: What will consumers want besides video on demand, largely seen as the force that will drive interactivity into cable TV households?

Few at the conference had answers.

"Convergence ... will transform the way every one of us does business," said Bell Atlantic Corp. Chairman-CEO Raymond Smith, seemingly undaunted by his called-off merger plans with cable giant Tele-Communications Inc.

Still, driving consumer demand requires development of a huge amount of software or program "content," Mr. Smith said.

"There are not enough New Jersey Bell safety films to fill up our video channels," he said.

Others thought Mr. Smith wasn't joking. "The 500-[channel] cable universe is a pipe dream and something that will be ultimately boring," said Harvey Weinstein, co-chairman of Miramax Films, in a panel discussion on problems facing the movie industry.

If Mr. Weinstein is proved wrong, then just where do ads fit in interactive TV?

Several speakers said marketers will inevitably resort to promotional tactics to spur such usage and draw viewers from entertainment fare.

Already, "the lines between entertainment and advertising are clearly blurring," said Christie Hefner, chairman-ceo of Playboy Enterprises. "That's what infomercials are all about." But Ms. Hefner said interactive systems, like consumer magazines, will be equally reliant on advertising and subscription or usage fees.

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