Before the internet you needed a fully stocked library with excellent organization and archive retrieval, top quality professors who could (because of technology) teach at-most an auditorium full of people, and the ability to meet in person with other people knowledgable of the subject which previously required a centralized meeting place (the university).
All of this is now provided with superior quality by the internet. Now the only advantage of a university is signaling where you got accepted, networking with similar people for future jobs, becoming socialized by a culture of university-types, and showing you have the discipline to jump through 4 years of fairly arbitrary hoops. There is value to this, but is it worth $200k+?
Additionally, the cost of education is so high that students are customers now. Expelling too many students is simply infeasible given the enormous debt issued by universities for their massive capital expansions (buildings, gyms, stadiums), and huge bureaucracies. Students are dictating the terms of who and what is being taught, and schools must cater to it or risk reducing their flow of new applicants, which is the death-knell of so many smaller liberal arts schools in recent years. Tenure threatens the ability to shape the school to match customer expectations.