[Editor’s Note: After a long time, I’ve read a most EXCELLENT post on state of the state of moocs. The author is John Cochrane, professor at University of Chicago’s Booth School of Business. He taught a Coursera course on asset pricing last fall and has written a comprehensive and lucid post – what he learnt and how he thinks MOOCs could “grow up”. I’d say read the full 2000 words of this post but since you probably won’t, the key points are excerpted below.]

#1: Moocs are a high fixed-cost business

Putting a class up in a mooc is not quite as much work as writing a textbook, but it’s nowhere near as easy as teaching a new class. If you’re tempted, beware! Preparing, taping, editing and uploading a lecture is not the same as walking in, telling a few jokes, and getting through the week. Fixing anything that went wrong or updating is costly too.

#2: Why is it high fixed-cost?

The software is still version 1.0 stuff. Quizzes and assessments are key to the success of a class, and these are still particularly rudimentary. On Coursera, really, not much more than multiple choice and numerical entry works well. Coursera software does not allow parts to questions, or students to try question 1, get a hint, solve it, see the answer, and then go on to question 2 which builds on question 1. You can’t even cut and paste pictures. As an instructor, taking those “prove x theorem” or “how do you resolve y puzzle” problems and turning them into meaningful multiple choice or numeric entry questions is the hardest part.

#3: Advice to professors: don’t dream of doing a mooc on your own

You need video and IT help. Most of all, you need pedagogical help, people who keep up with the fast-evolving art of how to successfully port classes on moocs. I had that help at the University of Chicago, and it saved me from horrible beginner blunders. Example: I wanted to tape my live classes. No, Emily, who was in charge of my class, insisted that we do it months ahead of time in 5-8 minute segments. This little tip alone saved me from what the Financial Times labeled, in its review of Wharton’s moocs, “the death march of moocs,” so boring you will have “blood pouring out of your eyes” — and the necessity to do it all over again right.

#4: MOOC is just a “modern textbook” and “flipped classrooms work”

There is a good analogy between textbook publishing and mooc creation — high fixed, low marginal cost (now zero for textbooks too). It leads to superstars with established brand names taking over the market, and Alex speculated that publishers will know how to recover costs.

A lot of mooc is, in fact, a modern textbook — because the twitter generation does not read. Forcing my campus students to watch the lecture videos and answer some simple quiz questions, covering the basic expository material, before coming to class — all checked and graded electronically — worked wonders to produce well prepared students and a brilliant level of discussion. Several students commented that the video lectures were better than the real thing, because they could stop and rewind as necessary. The “flipped classroom” model works.

#5: Teaching the flipped classroom is a lot harder!

The old model, we pretend to teach, you pretend to learn, filling the board with equations or droning on for an hour and a half, is really easy compared to guiding a good discussion or working on some problems together.

#6: A boon to specialization

Already, I received a few inquiries from faculty at other institutions who wanted to use my mooc as part of their program. They have small PhD programs, or don’t have faculty in my area, so they can’t staff a full class on asset pricing theory. So, use my mooc; guided by a TA or faculty member who isn’t expert in the area, and isn’t paid a full teaching credit. So much knowledge is so specialized, and no university can host an expert in anything. There has been some bemoaning the “economics of superstar teachers” that moocs may create. For freshman physics, maybe. But if there is one world superstar in, say, second century sanskrit poetry, (I’m making this up), now every university in the world can offer a class in second-century sanskrit poetry.

These were the best two sentences:

However, no question about it, the deadly boring hour and a half lecture in a hall with 100 people by a mediocre professor teaching utterly standard material is just dead, RIP. And universities and classes which offer nothing more to their campus students will indeed be pressed.

#7: Universities packaging MOOCs, not unlike “textbooks”

There are thousands of mooc classes out there. There is certainly room for an institution that has searched for the good ones, and says “we offer a degree if you make it through mooc x y and z.” If the university offers guided study groups, all the better. Universities are loath to offer real course credit for moocs. So there still is a business model much like the textbook model: universities charge students for degrees. And moocs can charge universities for use of their materials in this case, while allowing them free otherwise. This just extends the model many places have, that course materials are freely available.

#8: Universities creating MOOCS to “promote brand”

In my exit survey, I asked how taking this class changed the students’ perceptions of the University of Chicago or the Booth school. About half said their impression was improved, and about half said no change because they already have a good impression.

In sum, one “model” that may work is that online classes, expensive though they are to produce, are simply one of the many fixed costs that universities anxious for widespread “brand recognition” must undertake, without direct “monetization,” just as they hire star research faculty.

#9: Moocs as snazzy textbooks, monetized by textbook companies. Pearson anyone?

In sum, I see two possible paths this could take. Moocs could become snazzy textbooks, “monetized” by textbook companies. Or they could become a central way universities establish a presence beyond local campus walls, generating the “superstar” market. Or, perhaps, a bit of both.