use strict;
my @names = sort map { chomp; $_ } <DATA>;

my $len = 2; # adjust to suit your taste

my @bucket;
FILL: {
  my $prefix = common_prefix(@bucket, $names[0]);
  if (length $prefix >= $len) {
    push @bucket, shift @names;
  } else {
    print common_prefix(@bucket),"\n";
    print join("\n", map { "-- $_" } @bucket), "\n";
    @bucket = ();
  };

  redo FILL while (@names)
};
print common_prefix(@bucket)
  if @bucket;

=head2 C<< common_prefix LIST >>

Extracts the common prefix out of a list of strings. The strings
may not contain the character C<\x00> because I'm lazy.

=cut

sub common_prefix {
  local $" = "\x00";
  "@_" =~ m!^([^\x00]*)[^\x00]*(\0\1[^\x00]*)*$!sm
    or die "Internal error: '@_' does not match the RE";
  $1;
};

__DATA__
U2 - October
U2 - Rattle and Hum
U2 - The Joshua Tree
Talking Heads - Sand In The Vaseline - Disc 1
Talking Heads - Sand In The Vaseline - Disc 2