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By Shalini Ramachandran and Mike Shields 

Several big media companies have agreed to make content available for a planned YouTube subscription service that will let consumers watch videos without any ads, despite their initial reservations, people familiar with the matter said.

The companies that have signed up include Time Warner Inc.'s Turner cable unit, 21st Century Fox's Fox Sports, A+E Networks Inc., and Comcast Corp.'s NBCUniversal, the people said. Walt Disney Co. is among those that remain in negotiations.

YouTube, which is hoping to launch the service soon, has told media companies that it plans to charge consumers around $10 a month for a bundle of YouTube's vast sea of video content and music.

Under YouTube's deal terms, content creators collectively will get 55% of the overall subscription revenue generated. Each individual creator or company will get a slice of that money based on the amount of time users spend on their videos, according to people briefed on the terms.

Not every media company was thrilled about carving up the cash in that manner. Some believed they should get a disproportionate share compared to smaller YouTube creators, because their brands and content are critical to getting people to sign up in the first place.

Nevertheless, YouTube has managed to bring in several big media companies without altering the revenue split terms. Other companies are still in negotiations.

"We are progressing according to plan to provide fans more options in how they enjoy content on YouTube," the company said in a statement. "We have support from the overwhelming majority of our partners, with over 98% of content watched on YouTube covered by agreements, and more in the pipeline about to close."

Recode earlier reported that the service was in the works and will cost $10 a month.

Getting into the subscription business marks an important shift for YouTube, whose ad-supported platform has made it a major target for marketers looking for greater digital media exposure. The site has built a massive audience -- it says it has over a billion users globally watching hundreds of millions of hours per day -- but still isn't a profit driver for YouTube-parent Google. The subscription offering will bring in a new revenue stream.

Some media companies felt strong-armed by YouTube into participating in the subscription service, industry executives said. YouTube has told its creators that they need to sign onto the service, or their videos will no longer be available on the free version of YouTube in the U.S., the people familiar with the matter said. TV channels see YouTube as a tremendous marketing tool, and generally don't want to be shut out of it.

"I'd rather not have anything to do with it," one media executive said. But the marketing and advertising benefits from being able to have clips up on the site "slightly outweigh the negative" for now, the executive said.

In the absence of preferred rates, some traditional media companies have been negotiating for extras, such as guarantees that their content will receive additional promotion on YouTube, to sweeten potential deals.

There is some sense among traditional media partners that YouTube's subscription business may end up having a limited appeal, so that it won't impact their revenue derived from YouTube. And they expect that YouTube will take measures to ensure that its creators' businesses are not hurt by this offering--that creators will at least make as much money from their videos as they would via the ad-supported YouTube.

Write to Mike Shields at mike.shields@wsj.com and Shalini Ramachandran at shalini.ramachandran@wsj.com

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(END) Dow Jones Newswires

October 16, 2015 16:47 ET (20:47 GMT)

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