LONDON — British TV may not be the best in world. But it does have a psychotic energy that stops you in your tracks. Only the Dutch, it seems, are able to outdo us when it comes to repackaging controversy and conflict as forms of mainstream entertainment.

Take the case of Jade Goody. Jade, for those of you who haven’t been watching, is the very embodiment of 21st century celebrity culture. Back in 2002, as a 21-year-old from a difficult background, she found fame on U.K. Big Brother. Ridiculed at first, her blunt honesty and outrageous behavior eventually won her legions of fans.

This led to merchandise deals, reality TV guest appearances and, in 2007, a spot on Celebrity Big Brother. This couldn’t have gone worse – with Jade accused of bullying and racism against a fellow contestant (Indian actress Shilpa Shetty). So severe was the criticism that Jade’s commercial earnings were decimated and CBB broadcaster Channel 4 was subjected to a wave of public anger it has never really recovered from.

That should have been the end of Jade’s 15 minutes of fame. But then she found out that she had cervical cancer (while guesting on Big Brother in India). The sympathy that ensued led to a new TV deal with thematic channel Living – in which Jade’s battle with cancer was played out before the nation.

Then, in February, the story took an unexpected twist. Rather than recovering (as we all thought she would), Jade learned she was terminally ill. The result has been acres of media coverage and a run of rights deals with broadcasters and magazines. By inviting the British public to share her final few months (including her wedding), Jade wants to earn enough money to secure her children’s futures.

There is, of course, a big moral and metaphysical debate about all of this – so we don’t need to go over that ground again. But less attention has been paid to what headline-grabbing stories like this do to the way audiences relate to the TV industry. Well here, for what it’s worth, is my assessment.

Firstly, they are bad news for drama production. While publicly funded broadcasters and U.S. studios can still justify the necessary outlay on drama, commercial broadcasters are running scared. And you can see why. If Jade, Jordan, Paris Hilton and 10,000 reality derivatives can drive audiences, then why bother with drama’s scary risk-to-return model? Better to acquire U.S. dramas – which come with a track record. Or live sports rights – which attract AB audience demos and are TiVo-proof.

Secondly, this kind of content must surely spell the end for general-entertainment channels – because it polarizes audiences. U.K. commercial channel ITV has been desperate to secure an exclusive interview with Jade – in the belief that this is key to its survival. But the reality is that Jade’s story only appeals to a narrow band of the audience. For the rest of us, the world of digital and on-demand has never looked more appealing. Not only that, but channels which place too much emphasis on celebrities do so at the expense of their own brand – which is only as good as the next celebrity scoop.

Finally, reliance on such content reinforces the current climate of risk aversion among broadcasters and producers. Look again at ITV. Deep in the midst of a financial crisis, it needs a breakout hit. So what does it do? It launches The Colour of Money – a Saturday night game show hosted by Chris Tarrant (the man who fronted ITV hit Who Wants to Be a Millionaire?). Not only is trading off Tarrant backward-looking, the show is another of those Deal or No Deal-style reductive shows where the need to answer questions has been replaced by a random mechanic designed solely to encourage abject misery or hysterical joy. Truly, it would be no surprise to discover it is an ad-funded concept devised by the OTC pharmaceutical industry.

Thank God, I say, for long tails and fat bellies – and no, that isn’t a new C4 shockdoc.