A major problem with on-line education in contemporary universities is securing cooperation of academics. This paper argues that even if the benefits of on-line learning are widely recognised, several incentive problems inhibit academic staff participation. These incentive problems include unverifiability of expertise in on-line learning, the firm-specific nature of investments in on-line learning and the team nature of on-line learning. Suggestions are made for remedying each of these problems by correcting the distorted incentives faced by academics and administrators.