After experimenting with client side approach to clustering large numbers of Google markers I decided that it won't be possible for my project (social network with 28,000+ users).

Are there any examples of clustering the coordinates on the server side - preferably in Python/Django?

The way I would like this to work is to gradually index the markers based on their proximity (radius) and zoom level.

In another words when a new user registers he/she is automatically assigned to a certain 'group' of markers that are close to each other thus increasing the 'group's' counter. What's being send to the server is just a small number of 'groups'. Only when the zoom level/scale of map is 1:1 - actual users are shown on the map.

That way the client side will have to deal only with 10-50 markers per request/zoom level.

This is a paid service that uses server-side clustering, but I'm not sure how it works. I'm guessing that they just use your data to generate the markers to be shown at each zoom level.

Update: This tutorial demonstrates a basic server-side clustering function. It's written in PHP for the Static Maps API, but you could use it as a starting point.