Family sharing vs. "Media and Purchases" account

Decades ago, I created an Apple ID (ID #1) and began using it for music and app purchases. After getting married, my wife and I each signed up for iCloud accounts (ID #2 and ID #3) to separate device backups. In order to continue accessing past purchases, we set our devices to use ID #1 for "Subscriptions" and "Media & Purchases".

We now have children that are reaching the ages where we are getting them devices and signing them up for their own iCloud accounts. I have signed up for a Family Apple One plan to give everyone access to iCloud+ and Apple Music. However, we are starting to bump into the 6 person limit for a Family Sharing plan.

The Apple One plan is under ID #1 because it is the account set up on our devices for "Subscriptions" and "Media & Purchases". My ultimate question: does ID #1 need to be included in the Family Sharing in order for that subscription to be shared with the family? I would like to not include it as a family member to make space for another kid, but can't figure out if that means no one in the family will be able to access that subscription.

Really wish Apple would let you merge or transfer between Apple IDs. It would simplify scenarios like this greatly.