You need to import the cd. Go to iTunes menu>preferences>general, there you'll find the settings for importing. Set it up the way you want, i.e. the file size and format you want(256 Kbps and AAC is fine) and then click the ok button. Insert the cd into your 'puter and you'll see it show up in the side bar. Click on the cd and you'll see the import button in the bottom right corner. Click import and do a little dance for having imported your first cd!