The European Commission’s Audiovisual Media Services directive, agreed in May to replace the 1989 Television Without Frontiers rules, is likely to be nodded through by the UK government, “senior officials involved in the decision-making process”  tell FT.com. As well as making the first distinction between linear media and on-demand TV, the AVMS significantly relaxes rules on product placements in TV, or TV-like, shows. Not only does this guarantee the legality of the business model operated by Bebo’s interactive KateModern drama serial, it also gives other producers some relief over future advertising funding as more and more TV viewers opt to bypass the traditional three-minute ad break with PVR boxes. KateModern, which is doing most to popularise this funding method online, includes subtle product appearances for Orange, MSN, Procter & Gamble, Buena Vista International and Paramount Pictures, and producer LG15 aims to replicate the strategy in future interactive productions. The UK had outlawed product placement aimed at children, but at least the new rules include some stipulations - viewers must be made aware of the placement and ads will be limited to 12 minutes per hour. European national governments have two years in which to implement the directive.