Why is ex-unicorn Cameo incapable of paying a $600k penalty?

Chris Townsend, managing director of Manchester-based What Media, decided to cheer up his father Stephen who was diagnosed with bowel cancer in December 2023 and about to undergo six months of chemotherapy. Townsend used Cameo, a platform that offers millions of personalized video messages from celebrities. He got The Royle Family actor Ricky Tomlinson to do a personalized message for £75, and Tomlinson turned it into a seven-minute message. The video helped to distract Stephen and lifted his spirits. Joe Seager, a digital marketing executive, also used the platform to get a personalized message from wrestler Mick Foley, which was longer than the average message and delivered within an hour. Nathan Selby, a director of channel marketing agency Resultful, got personal messages from drag queen Cheryl Hole and Amanda Lovett from The Traitors. Although some people had bad experiences, Cameo has received thousands of gushing testimonials and has grown rapidly since its launch in 2016. The platform has attracted celebrities, sports stars, and politicians who charge fees for delivering personal messages and endorsements, with 75% going to the celebrity and 25% to Cameo. However, Cameo hit a roadblock in the US when its ‘Business Cameo’ service, which allows businesses to hire celebrities to promote their goods or services, was found guilty of failing to ensure that consumers knew they were watching paid endorsements. Cameo’s owners, Baron App Inc, had to pay $100,000 in penalties. Although the platform remains open for business, its inability to attract bigger stars has hindered its growth. Moreover, during the pandemic, when people were stuck at home and celebrities were unable to work, Cameo flourished. However, with the end of the pandemic, Cameo’s appeal has declined. The company’s problems have been widely discussed on forums, where people report difficulty in finding celebrities they are interested in, even when sorting by the highest amount. In its quest for growth, Cameo launched an advertising arm where celebrities would endorse products, but the endorsements were not properly disclosed as paid endorsements in violation of endorsement rules issued by the Federal Trade Commission (FTC) and New York’s consumer protection laws. The company’s financial challenges were laid bare during this process as it emerged that it was unable to pay the initial $600k fine. Galanis has not commented on the fine or the company’s apparent cashflow problems on social media. Despite its meteoric rise, Cameo’s story is another reminder of the unpredictable nature of the tech world.