Martin,
Unless you wanted to custom code something, the easiest way is to create Categories/Subcategories for each letter ie:
A B C etc. then group artist products whose name starts with that letter into their respective letter category.
So if you didn't want a whole bunch of top-level categories titled by just one letter, you'd create a top-level category called "Artists" then subcategories with each letter. Then group products accordingly.
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