With the current flat structure of albums, they are only useful for a limited number of short term collections.
I'm still using Aperture and use the "albums inside projects" feature in Aperture quite often. In my organization a project is usually a vacation trip or an event and inside a project I usually have albums with Top50, Top 200, 4:3 crops for slideshow on iPads, prints shared online etc. Plus some smart albums that group photos by camera, sometimes even by lens for evaluating a new lens.
Think about keeping this in a flat album structure where the albums have no relations to the projects (or folders in Luminar). Would be a nightmare even with a clever naming scheme.
The easiest solution would be to implement virtual folders within the albums section. Would work somehow for my workflow but they are still disconnected to any folder. Better solution would be to add on option for defining the root for an album either all pictures or a single folder and if the album is bound to a folder it is displayed within that folder.
As the folder section in Luminar is a direct representation of the folders on the harddrive, I admit it somewhat spoils the clean approach of the folders section. But I don't think anyone would search for that album file in Finder and if the icon is very different from the folder icon, it should be clear that this is only a virtual structure element. Of course any album bound to a folder should update if the folder is moved or renamed.
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