The introduction of the Internet medium has accelerated changes in marketing communications. This chapter proposes an Interactive Marketing Communication Model that reflects two types of online conversations, business-to-consumer and consumer-to-consumer in three settings: business-directed, consumer-directed and independent group-directed. The conceptual model serves as the foundation that postulates the increasing effect of the new medium in new-product diffusion. The model is empirically tested with the diffusion of two new products: the Video Cassette Recorder (VCR) and the Digital Video Disc (DVD) Player, introduced prior to and after the commercialization of the Internet medium. The diffusion of the DVD player introduced after the Internet is found to have an increased network effect in terms of a larger imitation effect over an innovation effect expressed in the parameters of innovation (p) and imitation (q) within the Bass Model. The empirical findings clarify prior postulation that the Internet medium would change the patterns of new-product diffusion among innovators and imitators. Both the conceptual framework and empirical findings shed light on the increasing importance for managers to include Internet-enabled communications in their new-product marketing strategy.