Just a gratuitous link since I’ve read all this stuff already, but Cory Doctorow blew me away when I first read Ownz0red on Salon. See the rest of this post for links to many of his stories.
Cory operates on the Creative Commons license (thanks to a generous publisher) and his work is freely downloadable, distributable, reproducable, and performable, as long as you give him credit, don’t sell it, and don’t make derivitive works (and he wouldn’t mind if you bought a book, I’m sure).
I already mentioned Ownz0red, my favorite story, which also earned Cory the John W. Campbell Award for best new science fiction writer at the 2000 Hugo Awards. But he has a lot of others available. You can download 6 stories here.
You can also get Down and Out at the Magic Kingdom for free as well (and I highly recommend this story, too).
Other things (commentray aside):
Truncat (requires Salon premium or sitting through the ads)
Liberation Spectrum
Cory is also an editor for Boing Boing, a great blog about pop culture.
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