I have seen that some people are publishing articles after rewriting. Is it legal? They just pass the copyscape test but If you read it properly you can find it easily its a modified version of original articles.

Well last time when my site was losing visitors i made a quick wordpress site with articles from big article sites, and it went from pr1 to pr3 real quick.
I say it helps if you dont actually get caught.

I have collection of more than 55000 articles in mysql format so I think its easy to setup the website and getting good rank. But chances are very high to get caught. And I think I would have to pay more than the what I am getting.

So Do you advice me to use those articles directly or after rewriting. Or should I hire few writers to have unique articles?

It depends on how the article is copyrighted

There are two ways of copyrighting:

1. Some Rights Reserved - You can rewrite and put a link to the source

2. All Rights Reserved - You are sued legally if caught copying...

Then I have one more doubt in mind, if I copy articles and keep all links and author name as it is from free articles directory database. Is it legal? or it will considered as illegal too

I guess if you change enough of the text, it should be ok. I would not do that though. I would rather have original content, not published anywhere else. It spices up things.

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I am asking this because I have a database of more than 55000 articles and I can easily launch websites from it with google adsense. But I want to confirm first whether I can use them or not. I am planning to use it with authors link and name.

It depends on from where you are copying from..

I rewrite content and articles from scratch always and I think it is the best way. You simply print out the content and then rewrite the whole text in your own words. No one can ever accuse you of anything if you do it this way. It does take slightly longer though to create content this way.

This is complicated because like swap mentioned it depends on the type of copywrite. Some authors give up their writes to their work for a flat fee and that work becomes the property of the company that purchased it.

There are a lot of sites that rewrite articles so I guess it wouldn't hurt but it is always best to seek legal advice when you are starting to make a lot of money from it. Reason being when you are making your millions people are going to start looking for ways to share in your wealth.