What's one key difference between data and traditional commodities like oil, natural gas, and gold? Unlike these natural resources, data is infinite. This is a critical thing to keep in mind as the global economy continues to go digital.

Peloton (NASDAQ:PTON), the $35 billion home-fitness disruptor, collects troves of data from its 3.1 million members, of which 1.1 million are connected fitness subscribers (they purchased a piece of Peloton equipment and pay the $39 monthly fee).

Subscription-based businesses, adored by investors because of their recurring revenue streams, rely on maintaining a relationship with their users. What they do with all the data they amass ultimately determines their long-term success. Peloton is no different.

A data center with a long aisle on either side of which are banks of computers.

Image source: Getty Images.

A virtuous cycle

In the quarter ended June 30, connected fitness subscribers averaged 24.7 workouts per month, more than double the monthly average in the same period last year. This higher engagement provides Peloton with valuable information about its members' exercise habits.

During Peloton's first Investor and Analyst Day as a public company, President and Director William Lynch emphasized just how important this is: "In addition to our growing list of fitness disciplines, we're sitting on a mountain of member data on what they prefer. This is a strategic advantage for Peloton. We can use this data and do use this data to inform our programming."

Peloton's data strategy draws parallels to how Netflix operates. Member data is analyzed and applied to content development with the goal of constantly improving the service offering and user experience. This has led to Peloton creating a vast workout library, from cardio and strength training to yoga and meditation. As the company expands into non-English-speaking countries, it plans to produce classes in local languages as well.

Just like the streaming video giant, Peloton's competitive moat will widen over time as its users form habits around its products and services. Once set in motion, this virtuous cycle is hard for rivals to compete with.

Potential opportunity

Peloton's growing library of consumer data has the potential to generate other sources of revenue. Sounding optimistic in response to an analyst's question on the most recent earnings call, Co-founder and CEO John Foley said, "You're absolutely right about the opportunity we see with corporates and insurers ... We think that this is a massive opportunity and potentially a very big growth vector for us in the coming years."

He's referring to health insurance providers using Peloton's user data to offer discounts to its policyholders. In other words, if I'm a connected fitness subscriber and I work out on my Peloton Bike or Tread a given number of times per month, the premium on my health insurance plan will be discounted. I'd assume a sizable chunk of members would choose to share their data if it meant lower insurance bills resulting from concerted efforts to improve health.

Although Peloton may not do something like this for a long time, it does bring up another issue -- data privacy. The company's main focus right now is to protect consumer data.

"I'm sure in the coming quarters we'll have something to talk about," Foley added when discussing this possible revenue opportunity.

The future is data

Peloton's stock is up over 300% this year, as company prospects get a boost from people's hesitation to go back to gyms. Investors seem to very much approve of the company's ability to utilize data to drive the continuous enhancement of the user experience. Owning this relationship by delighting customers is a competitive advantage, and Peloton stands to benefit for the foreseeable future.