They did indeed come up with a useful (if not quite new) approach. Their original idea (exactly like ours) was to offer free electronic versions of their textbooks as well as inexpensive paperback editions.
Our textbooks are just the ones we have written, and all of them are mathematics textbooks. FlatWorldKnowledge hoped to have all college textbooks in all areas available in their model.
It's a great idea for the students. Free PDF files. If you also want a paperback, then buy one for a reasonable price (not the $100 or more the major publishers want). It's also a great idea for authors. The royalty from the big publishing houses is pretty small anyway, so why not bypass them and give the students a break. Many students just use the free version -- some (enough) buy the paperback.
As it turns out, though, perhaps this "new" idea is not so commercially viable, or, if it is viable, it is just not profitable enough for most entrepreneurs.
FlatWorldKnowledge has now announced: