If Grooveshark did something like an artist revenue sharing program, I'd be more sympathetic to them. But they don't. I haven't seen Grooveshark really show interest in changing what is broken in the music industry. I see a company taking copyrighted work and throwing their ads next to them. Furthermore, taking customers' money to access special features related to the infringement.
Stolen cars can be bought for cheaper and with less paperwork. Ignoring laws does improve the Grooveshark experience. You say the laws need to be updated, but I honestly don't see what is wrong with a company holding rights to the music they produce. Grooveshark makes money off of copyright they don't own. Their own "Popular" featured section is chock full of infringement. They claim DMCA (a law I thought most techies liked), which is fine and well. Worked for YouTube. But they are going to have to defend that in court, and I have my suspicions that they might not be following the letter nor the spirit of DMCA.
I'd say plethora is wrong at least in US. Ridiculous retroactive copyright extensions would be my main gripe (though I doubt Grooveshark has any works that are about to become public domain). Or creative accounting that makes artist indebted even if their song is sold in millions.
Also I have a suspicion that most people use Grooveshark as a form of radio in such way that it doesn't really feed on artists main source of profit (CDs and concerts).
However don't take this out of context I still dislike lack of any mechanisms for artist reimbursement.
The anti-circumvention provisions are ridiculous. Decrypting a DVD you own is illegal - even posting a link to circumvention software is enough to violate the DMCA. Web sites got C&D orders for hosting a number. Dmitry Sklyarov was arrested for writing software. If those examples don't seem ludicrous enough, there are plenty more.