I'm not sure what you mean by "lost their way". The Grateful Dead were never a top 40 proposition to begin with. But they never failed to play to packed houses, no matter the size of the venue. The band's performances varied widely in quality during the 80's, because of Jerry's drug use, but that never actually affected the band's drawing power.
Incidentally, the success of Touch Of Grey (the band's one and only top 10 hit) was a mixed blessing, as a lot of that "new generation of fans" served to create a situation where the band was getting banned from a lot of venues. It was to the point where the band was literally begging to people not show up unless they had tickets, and they also had to put the kebosh on the parking lot scene, because that was were all the trouble was coming from.
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