Their solution is to provide an online (read low cost to them) venue for aspiring writers who would have to agree to cut these folks in for a share if their stuff ever gets picked up anywhere that pays real money (not just the actual story that was published, but the universe/characters/concept). They say they're looking for "less-established and new authors who will be amenable to our terms." Read: desperate enough (or dumb enough) to sign anything.
They're advertising for an editor for their e-zine on Craig's List. Presumably the ad is listed under "Editor wanted, no scruples needed."
It's probably legal, but sheesh!