If you want to make using collections easy, use Calibre. I use manual Metadata management and it's great.
from the
Calibre FAQ:
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When you send a book to the reader, calibre will add the book to collections based on the metadata for that book. By default, collections are created from tags and series. You can control what metadata is used by going to Preferences->Advanced->Plugins->Device Interface plugins and customizing the SONY device interface plugin. If you remove all values, calibre will not add the book to any collection.
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Collection management is largely controlled by the ‘Metadata management’ option found at Preferences->Import/Export->Sending books to devices. If set to ‘Manual’ (the default), managing collections is left to the user; calibre will not delete already existing collections for a book on your reader when you resend the book to the reader, but calibre will add the book to collections if necessary. To ensure that the collections for a book are based only on current calibre metadata, first delete the books from the reader, then resend the books. You can edit collections directly on the device view by double-clicking or right-clicking in the collections column.
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