The Washington Post is to be sold to Jeff Bezos, the founder of the web retail giant Amazon, in a move that has shocked even seasoned observers of the turmoil in the US newspaper industry.

The agreement to sell one of the legendary titles in American newspapers brings to an end the 80-year control of the paper by the Graham family which steered the Post to national prominence through such landmark journalism as Watergate in 1972. The deal was conducted in such secrecy that even the Post's own stable of investigative reporters were taken by surprise when the paper published on its website a story about the transfer.

"This is absolutely stunning news," the media commentator Jim Romenesko told the Guardian. "Just as surprising is that it didn't leak in a building filled with investigative reporters."

According to the Post's own account, the initiative for a sale came from the Graham family and not from Bezos. Donald Graham, chief executive of the Washington Post Co which currently owns the title, used an investment firm to approach six "potential suitors" amid tightest security before choosing Bezos.

The sale price was set at $250m, a relatively small sum for such a legendary institution – 1% of Bezos's enormous personal wealth as put by Bloomberg at $22bn. The figure elegantly captures the dire economic state of many of America's leading news titles, coming as it does just days after the sale of the Boston Globe by the New York Times Co to the owner of the Red Sox, John Henry, for an even more paltry $70m.

Graham told his own newspaper that after four generations of ownership in the family, "every member of my family started out with the same emotion – shock – in even thinking about selling the Post. But when the idea of a transaction with Jeff Bezos came up, it altered my feelings."

Graham added: "The Post could have survived under the company's ownership and been profitable for the foreseeable future. But we wanted to do more than survive."

According to the Post article, Katharine Weymouth, Graham's niece, will continue to act as publisher and chief executive of the newspaper following its transfer to Bezos. "No layoffs are contemplated as a result of the transaction," the paper said. The Grahams will retain control of the Slate website, the Kaplan education business and, for now at least, the building that houses the Post in Washington, which is for sale.

The end of the Graham dynasty is the latest in a long line of family proprietorships that have succumbed in the face of the economic strife that has swept through traditional newspaper businesses in the US with the advent of the internet. The many casualties include the Bancroft family that sold the Wall Street Journal and Dow Jones to Rupert Murdoch in 2007, leaving the Sulzberger family still at the helm at the New York Times as stalwart examples of a dying breed.

At the other end of the extraordinary convulsion in fortunes brought by the digital revolution is Bezos himself, who started Amazon out of a garage of his home in Washington state in 1994. Since then he has torn a strip through the book publishing industry and through conventional retailing businesses that have struggled to keep up with his flexibility and taste for innovation.

Bezos told the Post that as its new owner he would be entering "uncharted terrain" that would "require experimentation". He tried to assuage those who fear his reign might bring editorial interference by saying "there would be change with our without new ownership. But the key thing I hope people will take away from this is that the values of the Post do not need changing. The duty of the paper is to the readers, not the owners."

The sale came as a complete surprise to almost all of the Post staff, and stunned the US media world. "This whole thing happened with admirable and amazing secrecy," said Jeff Jarvis, associate professor of journalism at City University of New York's Graduate School of Journalism.

Jarvis expressed reservations about the Post being owned by the CEO of Amazon, a relatively secretive company. "Bezos doesn't believe in openness. And that somewhat worries me. Both with how a newspaper operates, how a Washington institution operates and also with the need for business model experimentation to occur in the open for the good of the entire industry."

But Jarvis said that on balance, he said the sale was a good thing. "Bezos is incredibly smart, a nice man. He's terribly successful, he has the resources to do this, I think all in all, at first rush it seems like a good idea."

Bezos's purchase follows a recent trend of wealthy businessmen buying up newspapers. Last week John Henry, the Red Sox owner and Fenway Sports Group mogul, bought the Boston Globe and its websites for $70m, beating off competition from half a dozen rival bidders.

In July Warren Buffett's Berkshire Hathaway company – a major shareholder in the Washington Post Company – bought the Press of Atlantic City. Last year the billionaire investor bought 63 Media General newspapers for $142m, and in 2011 bought the Omaha World Herald for $200m.

"I would hate to think that the only way for news organisations to survive is by way of sugar daddies. That also brings its own set of problems," Jarvis said. "But the Post didn't have a clear strategy for where to go and private ownership does protect it.