How good was their business model? They survived for 10 years, including financing what I'm sure were expensive legal battles, but how much of that was from revenue and how much from equity/debt financing?
Grooveshark was completely self sufficient for a long time, even with the lawyer bills. What really killed it was the pressure from labels to get them kicked off ad networks, mobile app stores (first Apple, then Google), and prevent the more lucrative direct ad deals you need to really survive. Once the summary judgement occurred is when it really started becoming impossible.
Disclaimer I was an early employee that worked there for 5 years.