There are a number of quality kids' reading sites available for free, including Pearson's We Give Books, PBS Kids and Starfall. However, most free websites do not provide the extensive reporting functionality provided by Raz-Kids.
The Pearson's We Give Books website provides more than 100 digital books for children to read online. While there is no read-along functionality, the sheer selection makes We Give Books a good choice for individual or shared reading time. PBS Kids offers a wide selection of reading games and read-along books related to PBS shows and characters. Starfall does require payment for full site access, but they also provide a collection of free digital books covering early readers and graduating through letter recognition, letter sounds, read-along books and individual reading functionality.