Interesting development that is just one in a long line of hints that the MOOC bubble may be deflating somewhat - San Jose State has put its use of Udacity on hold. The article points to a fair number of pretty obvious reasons for things going less well than hoped, notably the lack of preparation and attention to detail that could affect any course. Not a problem with the idea, nor with the technology, nor the pedagogy, but with the execution of it.
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I don't think is so much about the MOOC bubble bursting. MOOCs are still valuable and are a lot of fun. But there are two expectations that may be unreasonable: (1) that this is a good way to deliver courses for credit, and (2) that the venture capitalists will get their money back. I remember the first dotcom boom where all these sorts of things were started up and there were lots of subscribers but no money. Doesn't take a genius to figure out what went wrong.
As to offering the courses for full university credit, that's pretty tough too. You can design exams, I suppose, that will have some validity given that so many exams are multiple choice even in "proper" university courses. But those courses usually have a written assignment phase. Or, in reverse, in my accounting courses, I have totally electronic assignments but I have a written exam where I demonstrate (or not) that I can produce a financial statement in good form.
Eve