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Ubud was the cultural, artistic, and spiritual heart of Bali centuries before the tanned, toned, and bejeweled began to sashay through the hallowed haunts of south Bali. Perhaps Ubud's destiny as a point of confluence was sealed in the 8th century by Rsi Markendya, a wandering priest from Java, who (legend has it) found the perfect patch for meditation where the eastern and western branches of the Wos River meet in Campuhan. This holy site is now Guning Lebah temple. Ubud's position as a center of the arts developed under Tjokorde Rai Batur, king from 1850 to 1880, a member of the Satriya family of Sukawati, who had been significant supporters of the arts and culture over the centuries.

Ubud's modern cultural prominence is a result of a fortuitous meeting of one of the scions of the House of Ubud and Walter Spies, who came to Denpasar in 1926. At the time the arts in Bali were undergoing a process of redefinition, as the traditional forms of patronage and funding, namely the rajahs and the temples, were under Dutch colonial rule and were no longer sources of wealth. Survival meant innovation and an important meeting of the minds. Walter Spies came to Ubud on the invitation of Prince Sukawati, and, together with friend and fellow artist Rudolf Bonnet, encouraged and financed individual artists in developing new styles that put art and artist ahead of tradition. This is known as the Pita Maha.

At about this same time Bali became the bohemian destination for glamorous artistic society, Dorthy Lamour, Charlie Chaplin, and Noel Coward loved it, Margaret Mead and her lover Gregory Bateson got married on a ship en route to Bali, and Barbara Hutton fell head-over-heels for Walters Spies who had a different sort of partner in mind altogether.

By the early 1960s, Ubud had attained fame as a unique artists' community. Enter Arie Smit, the most well-known and longest surviving Western artist in Ubud, whose Young Artists school of painting in Penestanan earned him an enduring place in the history of Balinese art. In the following years the entire artistic region around Ubud flourished, including the enclaves of Campuhan, Penestanan, Sanggingan, Nyuhkuning, Padang Tegal, Pengosekon, and Peliatan. Nearby are the centers of wood carving at Mas and of silverware at Celuk.

Described by many as one of the world's most magical destinations, Ubud, despite the advance of yoga centers, spas, villas, and luxury hotels, remains relatively unchanged. The town has taken a stand against the encroachment of tourism and has defended its cultural practices and artistic endeavors against the influx of outsiders. By order of decree no McDonald's, Starbucks, or KFCs are allowed within its boundaries.