The best way is fine, thanks for asking. As to "what" the best way is, I don't know. I organized such that the top level is artist, and the second level is album. Exception: compilations have a top level of "compilations", soundtracks of "soundtrack".

I have a second tree with the root being artist, the next layer being album, which means a Dr. Demento Compilation results in tracks in e.g. the Weird Al artist "directory", in a "subdirectory" named for the Dr. Demento album name.