All of these things are true, and I understand the concern. However, a few points have occurred to me about this, and I'd be happy for some discussion in the comments if people are interested.
- Many people do not really have the self-discipline to learn in an online-only environment. I like to think I was a pretty dedicated student (no smart comments from my former classmates, please), and I'm not sure I would have the self-discipline to watch online-only lecture material and do online-only assignments for an entire semester. Some people do have the personality for this, but I have a hunch that many of them are the same folks who really can check a book out of the library and teach themselves a new subject ab initio. Most 18 year olds are not like that, and the peer pressure/social environment of having friends physically going to scheduled classes is a major motivator. Bill Press, when he visited Rice and we chatted about this, pointed out that many people pay real money to take Microsoft online certification courses, and complete them at a high rate. That's true, but it's also a particular case where the financial benefits of completing that particular course are often very clear to the student, and it's also true that there's a difference between university study and vocational training.
- It only makes sense to develop online courses where your institution really adds value. Does anyone think it would be a good idea for every major university to develop their own MOOC for Introductory Calculus? We could do that, but in the end there will likely be a small handful of truly innovative, extremely well done calc courses. The market will drive toward some kind of mix-and-match mode of operation (unless the content providers constrain things greatly).
- The sense of urgency is not unreasonable, but early innovators don't necessarily win the day. For example, Lycos and Alta Vista were early to the scene in "search", yet comparative latecomer google crushed them.