Western Governors Uni has over 30,000 students. It was set up by 19 US Governors.

Oh pleeease, how patronizing. I, like many other Cousera students, are using this course to come up to speed with the pedagogy involved in applying game principles to an enterprise. Many other students will be trying to advance their knowledge within the constraints of their income and location. Any university which isn't seriously looking at their business model is in denial about the disruptions that MOOCs will create for BAU. The only Melbourne university that appears to be up with the play is Swinbourne, which recognises that you don't just put lectures on the web but have to develop a learning/teaching approach for online degrees. [discaimer: i know people who set it up]. The history of innovation is the combining of elements through experimentation, prototyping, iteration and disruption. Coursera will evolve and provide a range of courses/degrees that suit a range of students and transform tertiary education, particularly foe the digital native generations, and those facing a challenging pathway to work as in much of Europe, and in America.

My bet is that far from cannibalising on-campus degree fee income, the elite universities will gain even more money, and brand haloing, from also offering cheap online degrees. I will also bet that hundreds of universities around the world will collapse and fold. In Australia, I'd say many of the lesser Dawkins universities will be among the casualties But I am not persuaded online degrees are a threat to the rivers of gold from elite on-campus college degrees.

Even though the fees charged by elite US colleges are an inredible $40-50,000 per year, my hunch is that most students are not paying for the classroom education, but for the plutocratic grooming. And even then, the elite tier now offer virtually free, and indeed absolutely free places to students from lower income families. This grooming experience could never be matched by their online offerings. I also think that the experience of living in a real academic setting with similar-minded people for 4 years provides an intellectual and social grounding that could never be matched online.

For students not admitted to the elite tier, a cheap online degree from the same university might be more appealing than forking out for a No Name university. From the elite universities perspective, these online courses could be a great opportunity to relieve themselves of the current 'two track' student admissions system, they are stuck with. On the one hand, they get the kids from top prep schools and public magnet schools, whose curricular covers freshman college level material (and sometimes even beyond) in high school. These students get to bypass the first year "stadium courses". OTOH, due to many considerations, they also have to accommodate a second track of undergrads, whose high schools did not offer the same advanced curriculum, so the colleges have to teach them the basics, which they do in "stadium courses".

Maybe the elite colleges could say to 2nd track applicants, "look, we think you're very smart, and you've performed brilliantly in the courses your high school offered, but you are way behind what we want to offer freshman. Take some of our online "stadium courses" to catch up, and you achieve a certain grade, we'll guarantee you on-campus entry next year/semester."

Having said that, once you've got that four year experience, you are very well prepared for more independent learning of an online degree, or just a single course, even in disciplines very different from your on-campus undergrad degree. Given the technology, the online offerings by edx, Coursera look magnificent. And Harvard has just upped its offering to include final assessments for even their humanities courses, and a university branded "Certificate of Attainment".

Rather than threaten their on campus goldmine, I think they have just struck an oil well that will gush low fees per online student, but from millions of them all over the world.

"With such extremely high attrition rates MOOCs clearly aren't serving the same role as traditional universities."

Well your "traditional university" must be very fancy indeed! After all, in only its first year - with barely any marketing -,the edX course "Circuits & Electronics" awarded 7,000 certificates to the students who passed the final exam, out of 8,200 students who sat the Final. How many students at your traditional university are up to passing an MIT/Harvard electrical engineering course?

The costs of attrition for edX are nowhere near as high as they are for on-campus universities, so rather than being a sign of non-viability, the attrition rate signals how demanding the course was, while the 8,200 who sat the Final is evidence that the demand out is already very high, and the potential demand incredible.

Where you are probably right is that very few of the students at your "traditional university" would have the skills/ability to get through the course, so wouldn't sign up. OTOH, the few talented students who do attend your "traditional university" might well take edX courses, which are more challenging than those offered on-campus.