About import settings and hard disk space
When you import a song into the library, the song is encoded and stored on your hard disk. The amount of space the file takes up depends on the song and the import settings that are chosen in iTunes preferences. The import settings also affect the audio quality of the imported song. Larger files take up more hard disk space, but generally sound better.
The default encoding format in recent versions of iTunes is MPEG-4 AAC, a compressed format that rivals the sound quality of audio CDs.
AAC-encoded files will sound as good as or better than MP3 files encoded at the same or even a higher bit rate. For example, a 128 kbps AAC file should sound as good as or better than a 160 kbps MP3 file. Because the bit rate is lower, the AAC file will also be smaller than the MP3 file. AAC files allow you to store the most music on your hard disk or iPod, and may allow for longer battery life on the iPod. The High Quality AAC setting creates files that are usually less than 1 MB for each minute of music.
If you plan to transfer files to a third-party digital music player, you might want to choose the MP3 Encoder and the High Quality setting to fit more songs on the player. The High Quality MP3 setting creates files that are about 1 MB in size for each minute of music.
The WAV and AIFF encoders do not compress the songs. They make files that are several times larger than AAC or MP3 files and take up a large amount of hard disk space (about 650 MB per CD or 10 MB per minute of music). Encoding music using the Apple Lossless encoder will preserve the high-quality sound found on the CD but create significantly smaller files than the WAV and AIFF encoders. Files encoded with the Apple Lossless encoder are still much larger than files created using either the default 128 kbps AAC or MP3.
Learn how to convert songs to a different file format here:
"iTunes: How to convert a song to a different file format"