Many universities are struggling to acknowledge, let alone respond to, this new wave of education. The Australian higher education funding model seems to induce paralysis, which means we may be left out of this reformation.

On what timescale will this happen? Universities are an entrenched part of society, which provides inertia. I'm guessing the change will be closer to the decade rather than annual scale.

I forsee great changes ahead for the academic work sector in response to the emergence of online courses such as those offered by Princeton. I predict that once online degrees are fully offered and credentialed, most students will eventually enrol online at whatever university they want to around the world. Some prestigious universities will retain a niche market, offering the benefits of an 'on campus' experience to a privileged few. Sydney University has already made this decision in response to distance education. The result for the academic workforce? Far fewer jobs.

This is an interesting article. In my book "The Global Market for Higher Education: Sustainable Competitive Strategies for the New Millennium", published in 2001, I and my co-author Geoff Soutar outlined six key trends that we anticipated would shape the way universities operate.

The first was the tension over whether a university's role was to stimulate education within specific fields or be a training centre for professionals.

The second was the need for universities to maintain the currency of their educational programs within rapidly changing markets.

The third was the rising cost of higher education and the increasing move to privatization and commercialism.

The fourth was the need for universities to develop and strengthen their alliances with industry for research and teaching programs.

The fifth was the emergence of new business models for higher education, including the rise of online education systems.

The sixth was the importance of building brand equity and leveraging this to secure an enhanced position within global markets.

Looking back on this 10 years on we find that all these trends have come true as major forces impacting the higher education sector. The rise of online learning is evidenced by the success of Western Governor's University, which was established in 1999.

Created as an online university by 17 State University Governor's across the Western States of the USA, today the institution has over 25,000 students. It was founded with start up capital of only US$40 million, split evenly between government and private sector investment. It charges for its tuition, but at a much lower rate than established universities and offers 50 undergraduate and postgraduate degrees.

The analogy between what is happening in newspapers and what might happen in universities is worthy of thought. What seems to have been the problem with newspapers is that the business model of paper-based distribution was built on the consumer paying only a little for the actual paper, while the real cost of printing and distribution was covered by advertising and classifieds.

The newspapers lost ground to online advertising and classified sites but gave away their editorial content for free until it was too late. Now they are trying to put up pay walls (good luck). They did not value their own editorial content and failed to get on the right side of the technology wave.

For universities it is a similar issue. Universities place a high value on academic research that is funded by the public purse, with minimal industry input, and then published for free in academic journals who sell it back to the universities for a high cost. The role of teaching, which is why students enroll and pay fees, is undervalued and few academics can retain their jobs or gain promotion if all they do is provide excellent teaching.

Like the newspapers, universities don't seem to value their academic content and this may cost them as the technology makes their business model redundant. Well designed online courses offered by prestigious institutions with strong brand equity, will indeed challenge smaller, less well regarded institutions. How much impact they have will depend on many factors.

An important issue is what is the main value offered by a university? If it is only to do an online course and get assessed by multiple choice tests then there is little long term future in higher education. If large US based universities offer free online courses, then Australia's universities might as well start shutting up shop if the only thing student's want is to engage with an interactive electronic textbook.

The textbook has been available for students to purchase without enrolling in universities for many years. In theory, anyone can buy a textbook, read it and do the various assignments and other activities, and get their learning from that without having to attend classes. Yet few students find this is a good way to learn.

Online learning (if well designed) offers more interactivity, peer to peer engagement and rich multimedia content. However, there is strong evidence that learning - particularly at a higher education level - is substantially enhanced via human interaction. The ability of a student to meet physically with other students, and to interact with teaching staff remains very important.

There is a need for Australian universities to review their business models. If they want to compete with this rise of free-online courses, they will need to find new ways to offer value to local students. I can see some potential to make use of this free content as educational material for locally delivered programs. I already do this now.

Yet we need to ask the question, what is the value proposition that we are offering to students? If it is just to enroll, read or view and online textbook, and then get a certificate, we might as well quit now. The university is indeed at a strategic cross-roads. It needs a rethink about its purpose, funding formula and how it configures its resources and processes.

Failing to get this right will place at risk not only many jobs in Australia, but the ability of this country to maintain any form of competitive edge into the future.

An important article, and something that a bunch of people at universities are starting to realise- though I've not heard much from senior administrative academics yet on how they will respond. Perhaps in 10 years time university senates will be facing the same problems that newspaper boards are currently.

However, I think there is a more fine-grained analysis that David did not discuss, which means some academic disciplines will be more exposed than others.

Firstly, for professionally accredited positions, such as medicine, teaching, engineering, law etc, there is a natural advantage that a local institution has over remote counterparts: I imagine it will be a long time before an individual with an online medical "degree" would be allowed to practice as a doctor in Australia.

Secondly, other degrees have substantial laboratory components. For computer science, these are typically in front of a computer, so there is little practically to distinguish a lab-based assignment from other assessment. But for biology, chemistry, physics etc, I am yet to see a computer-based simulation that can replace a real-world lab assignment for training to become a practising scientist. Furthermore, these labs are often expensive to run, and not easy to replicate in a private setting.

So I expect that university based subjects such as business, economics, mathematics, computer science etc, which have neither significant professional accreditation requirements, nor expensive physical laboratory-based assessment, will be far more exposed to the threats arising from online courses than others, including those mentioned above.

On the other hand, for graduate degrees, online courses are clearly the way of the future. It is difficult to imagine online course work replacing the apprentice-style research training that graduate students receive from their advisors, but graduate-level courses can certainly broaden the academic horizons of students in their chosen disciplines, to their great benefit. Arguably, no Australian university has the resources or grad-student numbers to viably offer the full set of graduate-level courses that are available at the top European and US institutions. As a result, we have set up a trial of such a program for physics masters and PhD students at UQ, in collaboration with UWA and Sydney University.

"More to the point, what right does a university have in charging for that?"

Speaking as a university academic that has generated online content (and is enthusiastic about online content), the answer is "to recoup the cost of producing it".

Each lecture, even the introductory lectures, takes a certain amount of academics time to produce, and while cheap we aren't free. Then there has to be a site that hosts it, server space is not free. Within the university, those costs are (partly) covered by the Government paying us to teach students.

Also, while some introductory materials can stay the same for a long time, in Science/Health Science introductory material will need to be refreshed periodically as new information works its way down and overall focus changes. So running review costs are involved.

Sticking up lectures by themselves is only part of it, in Science/Health Science lectures, even at the introductory level, involves tutorials and lab work. While Coursera and edX are interactive, they are being heavily subsidised, so that you can pay someone to interact with you.

Also, this material is from US point of view, which may not integrate well with the thrust of any courses we have in Australia (eg the Pharmacology module is for graduate students with a med focus, and is entirely inappropriate for the science-based Australian degrees, and may not help with the way or med degrees are set up with the Problem Based Learning approach)

Setting up assessments is nowhere as easy as you suggests, translating current assessment tasks into an all MCQ or MCQ plus peer assessment takes substantial time (academics time) which costs. Even peer- assessment requires a lot of set up before hand.. While there is a substantial part which is initial set-up, rather than running costs (and trust me, there WILL be running costs), it is still a cost.

Here's an example of one part of an online module. It is NOT standalone, but is integrated with lectures, tutorials and a detailed work sheet (otherwise it's a pretty picture that students will just skip over). It has taken time to develop in its current form, to test, revise and refine, all of which has a cost. Converting this to standalone online would again take time (and hence a cost).
http://home.mira.net/~reynella1/Jmol/GLU_NUL.HTM

A good discussion starter, David, but I'm not at all sure how disruptive this is going to be, because it's all focussed on the content and, sadly, I don't see any evidence that many of our students are all that concerned about the content.

Anyone interested in actually learning stuff has always been able to do that on their own, for centuries with books, then more recently with books, videos and software and now with the full power of the Internet that you describe. Linear algebra hasn't changed fundamentally for decades, there are hundreds of books on the subject, Khan Academy does a great job with free accessible and clear videos on it, yet still people pay money to enrol in (but largely not turn up for) MATH1001.

Why?

This has puzzled and frustrated me for years, but the only conclusion I can come to is that the content is largely irrelevant. Of course there are some students who love to learn, who come and ask deeper questions, and who treat the university and its professors as a valuable resource from which they can benefit. But they are the exception.

Ultimately I think that the whole point is a competitive ranking exercise - the main point is to GET IN to Harvard in order to say that you went to Harvard, and to mix with other people who got in to Harvard and join the clubs at Harvard and forever be known as a Harvard alumnus. And similarly all the way down the line, so that a graduate of the second most modest campus in Australia at least feels that they outrank the graduates of the MOST modest.

Harvard, Princeton etc can package up and give away the learning for nothing, because that's not what they are actually selling!