Like has been said already, I first organize by major genre. Then by artist's last name if it's a solo artiest, or if it's a band, the first word of the band name, ignoring articles like "the". Fortunately I don't own any albums by The The, because I'd have no idea where that would go...
Maybe a more important question is this: If you use outer sleeves, which way does the opening face? Up, down, sideways same direction as the sleeve opening, sideways opposite sleeve opening... 😀