Is this the best investment an Internet billionaire could have made? Photographer: Scott Eells/Bloomberg.
Is this the best investment an Internet billionaire could have made? Photographer: Scott Eells/Bloomberg.

Jeff Bezos's acquisition of the Washington Post for $250 million set the media world abuzz, but it's not as good a deal for the Amazon.com founder as the $315 million purchase of the Huffington Post was for AOL in 2011. The technological revolution in media has put an 8-year-old website on a par, if not ahead of, a venerable 136-year-old institution that, among other things, toppled a U.S. president by investigating the Watergate affair.

It's easy to see why the Graham family wanted to get rid of the Washington Post Company's newspaper division. The business unit generated an operating loss of $53.7 million in 2012, and bled another $34.5 million in the first quarter of 2013.

On the surface, the Huffington Post might not look much better. AOL's "Brand Group," in which the Huffington Post is by far the biggest asset, posted an operating loss of $32.8 million in 2012 and $4.9 million in the first quarter of 2013.

The losses, though, are of different quality. The Huffington Post is losing money mainly because it is investing in experimental services. Last year, for example, it launched HuffPost Live, a social video streaming network based on content from the parent site.

At the Washington Post, pension and early retirement expenses are driving the losses. They cost a total of about $51 million last year. In short, the paper's age and legacy costs are weighing it down.

The Huffington Post, in its eight years of operation, has built up a broader readership than the venerable Washington paper -- a testament to the power of AOL as a traffic generator. Last month, according to Quantcast, it had almost 72 million unique visitors and 595 million page views. AOL said in its 2012 annual report that since its acquisition in 2011, HuffPost saw a 48 percent increase in unique visitors.

The Washington Post's readership performance has nonetheless been respectable. The paper still had 480,000 daily print subscribers last year, and it generated an average of 323 million monthly page views from 41 million unique visitors. The visitor number was up 15 percent from 2011, an impressive pace of organic growth given the Graham family's lack of an Internet portal to drive traffic.

Bezos can do no less for the Washington Post than AOL did for Ariana Huffington's startup. Although the purchase of the newspaper is his personal project, rather than Amazon's, the huge Internet retailer gets plenty of traffic that could be directed to the Washington Post's content. And Amazon is growing, unlike AOL with its shrinking subscriber base.

After absorbing the pension and early retirement expenses, the Washington Post will be positioned for a future that may be just as bright as the Huffington Post's. Consider the New York Times, which last year saw its subscription revenue eclipse its advertising sales for the first time ever. The challenge and opportunity for Bezos and the Post is to maintain editorial quality while doing at least as good a job of monetizing web traffic as the Times has.

The Huffington Post won a Pulitzer Prize in 2012 -- a first for a completely Web-based publication and proof that in terms of content quality, the new media outlets can compete with the print giants that earned their reputations in the last century. The fact that the Washington Post missed last year's awards doesn't mean that quality is lacking: The capital's hometown paper still has a top-notch journalistic team. It won four Pulitzers in 2010, an achievement that will take The Huffington Post some time to equal.

The technological revolution in the media has all but wiped out the advantages of established industry players. Yet as long as they have the content, they can still compete effectively with younger rivals. Jeff Bezos, at least, is betting $250 million on it.

(Leonid Bershidsky, an editor and novelist, is Moscow correspondent for World View. Follow him on Twitter.)