The actual folder structure should be "Artist" then a subfolder for "Album". I think tags should then be used to create "virtual folders" to be viewed within Groove. For instance, Groove should automatically tag each song with artist, album, genre, and holiday music. Holiday music automatically applied if "Christmas", "Chanukah", "Kwanza" is in the album or song title. This holiday tag would stop my main frustration of holiday music getting pulled into "My Groove" or my random automatic mixes in any month other than December. Allow users to apply their own tags as well and have the ability to filter by one or more tags to create unlimited "virtual folders" based on selected tags. Songs could appear in multiple "virtual folders" even though they are only stored in one actual file. Then allow users to play, random, add to, based on the virtual folder. I never use Explorer to find anything other than pictures of documents. I will never use Explorer to navigate my music as "Groove" already does a nice "folder-like" handling of artist and album views. Add tags and allow virtual folders based on them.
Like others have mentioned, in addition to above, please offer a Groove Family Plan, ability to edit song info and album artwork, lossless formats and maybe even a "jukebox" mode that would allow users and party guests to cue songs up. Thanks for all your work on this and for gradually getting Groove to where Zune used to be and even better.