The Wall Street Journal reports that YouTube is deep in discussions with the movie studios to offer both paid (likely $3.99) and ad-supported movie rentals. This would include new releases, which would be new to YouTube.

Lion's Gate, Sony and Warner Bros are all reportedly discussing such a service with Google (who owns YouTube), although details are thin. Negotiations are still ongoing, so a lot of major issues (will downloads be available? Which films would be ad-supported versus a flat fee? What about TV shows?) are still unresolved. But if YouTube could get a solid, competitive system going, they'd have a fair chance at competing with Hulu, iTunes and Crackle and maybe even turn a profit one of these days. [WSJ]

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