A very simple solution would be to allow dots in playlists names (see below), and use those dots to fold/unfold groups of playlists that start with the same suffix.
This doesn’t require any change in the data/DB, only in the client #show-list-of-playlists JavaScript code .
Example: if you have 6 playlists named
Active Playlist
Book.The bible
Book.the linguist
News.europe
News.world
You could fold/compress them into
Active Playlist
Book. [+]
News.[+]
A click on the [+] would unfold the folded lines.