The CS department I was in (at a small liberal arts college) often used either textbooks written by one of the professors or previous editions.<p>The use of previous editions was great. It's not like discrete math changes that much anyways so using a copy we could get off Amazon for $1.70 was a great help compared to departments asking us to spend $80-200 on a brand new book.<p>Several professors also wrote their own books and just tossed the PDF on their website. One professor wrote a book on Scala for intro to CS classes, another on numerical calculus, a third (no longer in use) on Java and OOP for freshman.<p>I'm sure this isn't the only CS department in the world with this tradition but it's one that works very well. While you certainly run in to the issue of bad professors forcing subpar work on students, if you've got profs you can trust with the job the results, IME, can be quite good and better than commercially available texts.
These business models sound reasonable, as long as the supporting materials are truly supplemental. An open textbook that is complete (for example, with problems and exercises), is a good thing. If the text becomes an advertisement for the supplemental materials, then we have missed the mark.