Selling exotic and vintage musical instruments, by many accounts, is a business based on love, not money.

"I make about a nickel an hour for my time," estimates Jack Silver, co-owner of Tanglewood Instrument Shop at 9402 Georgia Ave. in Silver Spring, which carries vintage brass and woodwinds as well as string instruments.

"These businesses are run by people who would do it for nothing," he says. "If I wanted to make big bucks, I'd go into real estate." Silver, an avid instrument collector, intended that the shop sell nothing but older instruments when he and partner William Sher opened it in April 1979. But he found that "you don't stay alive just doing that."

Silver made a concession to business reality and began carrying some new instruments in addition to more beloved, older instruments. "I have a cornet in B flat that is something of a legend. It will take $3,000 to get it away from me," he says of a silver- and gold-plated F. Besson instrument made in London in 1880 and inscribed, "Presented to Mr. J. Lewis by the members of the Knutton Forge B Band Christmas 1880."

"We make money, but if my goal were a suburban house in Potomac with two Mercedes in the garage, it probably wouldn't happen," acknowledges David E. Eisner, owner of the House of Musical Traditions at 7040 Carroll Ave. in Takoma Park, which purveys such exotica as sitars, Chinese gongs, bodhrans [Irish drums], English concertinas and balalaikas. But, he adds, "a couple of older, owner-restored Volvos would be nice."

"As soon as I'm done with rebuilding one piano, I turn around and sink the money into another. It's better than putting it in the bank," contends Frederick Schaeffer, owner of Schaeffer's Piano Co. Inc. at 719 Sligo Ave. in Silver Spring, founded by his grandfather John in 1901. Schaeffer, who has rebuilt pianos and shipped them to customers as far away as Anchorage, Alaska, and Brazil, recently appraised the cost of rebuilding an 1888 Steinway grand at $9,200, whereas a new Japanese grand piano goes for $8,000. But restoring the Steinway will require an investment by Schaeffer of as much as 500 hours, using about $1,000 worth of parts and no fancy tools.

The sellers of vintage and exotic instruments are bucking a trend in the musical instrument business in which sales of brand-new electronic instruments, many imported from the Orient, are booming. At the same time, they are avoiding the pitfalls of sales of traditional band and orchestra instruments -- the industry's bread and butter -- which have been squeezed by cuts in school budgets.

The American Music Conference, official statistic-gatherer for the music business, does not even track figures on sales of vintage and unusual instruments. But experts say they may be as little as 1 percent of the market nationwide. "The business is based on kids and guitars, and everything else is secondary," says Jerry Hershman of the New York-based National Council of Music Importers and Exporters. Pianos, guitars, organs and flutes, in that order, are the most popular instruments among the nation's amateur players, according to a recent survey done for the AMC by the Gallup Organization.

As a result, few stores specialize in vintage and unusual instruments. At least one, Zavarella's Music at 507 23rd St. in Arlington, has gotten out of the business of vintage instruments because it took up too much space and time.

Others have cut back. Phyllis Condolin, owner of The Piano Shop at 1117 14th St., notes that the store sold nothing but older pianos when it opened 25 years ago, but has branched into new ones. "The Orientals have put a tremendous dent in the American market," she says, ticking off the U.S. piano manufacturers that have gone bankrupt. "It's still profitable to take a Steinway and rebuild it," but a rebuilt, ordinary studio piano cannot compete with new Japanese models.

"It's supply and demand," explains Craig Mossman, a manager of Massie Studios at 4932 Wisconsin Ave. NW. "Twice since 1980 someone has asked for bagpipes. We would have to have a good reserve of capital to stock up on items that don't sell. It would be aesthetically pleasing to hang a balalaika on the wall, but it would be a risky venture" to specialize in such instruments. "Maybe it would work in a place like Old Town Alexandria," which has "a vacation-like atmosphere" and "stores that don't make it in normal suburbs, like one that does nothing but sell Christmas items year-round."

"It's not a good business to be in unless you love it," says Eisner, whose seven employes themselves are musicians. "I could make money selling electric pianos, but then I'd probably have to spend money to take vacations to get away from it." But in his business, which has allowed him to indulge a passion for ethnomusicology that predates his purchase of the store in 1972, "oftentimes, the work and the play are the same. . . . People ask me if I'm overworked. I say, no, I'm overplayed."

Most of the small, privately held shops in the Washington area that specialize in vintage and esoteric musical fields do not measure their success solely by the bottom line. But some, particularly dealers of vintage guitars and violins, say the business can be lucrative. Many of the older shops are run by proprietors who inherited a business begun by their parents or grandparents; the newer ones often were founded by people who collected, swapped and sold instruments from their homes for years.

The vintage and exotic instrument business is time-consuming. Dealers camp out at festivals and conferences, place ads in trade publications, issue and religiously read catalogues, and even rummage through antique stores and flea markets. "You can find older instruments in pawn shops and backwoods if you have the time to go looking," notes Jim Kellar, owner of Oxon Hill Music at 6210 Livingston Rd. in Oxon Hill, which beefed up its stock of vintage instruments after being stung by a cut in Prince George's County's school music budget. "I don't have the time because I never leave my store."

The specialists have become the equivalent of scholars in subjects that, in many cases, are not taught in school -- such as the intricacies of a 1923 double-bell euphonium in B flat. The term "vintage" instruments, for them, connotes a scarcity and quality not conveyed by the word "used."

Vintage instruments are "a whole other business than a regular full-line music store," says Steve Papier, manager of Wheaton Music Inc. at 2505 Enals Ave. in Wheaton, which does not carry such instruments. "It requires a tremendous amount of knowledge, without which it is hard to know the difference between a $500 guitar and a $2,000 guitar."

The bulk of the stores selling vintage and unusual instruments are in the Virginia and Maryland suburbs, partly because the fire that swept down H Street during the 1968 riot displaced musical instrument shops in the District. When asked how many employes they have, the owners tend to count the number on their fingers; they prefer to speak in general terms about their finances.

Still, there are those in certain niches of the business who insist there is money in it.

Emory Knode, owner of the Appalachian Bluegrass Shoppe at 643 Frederick Rd. in Catonsville, Md., believes that "a specialty shop such as ours will always be able to survive." Knode sells such instruments as guitars, dobros, mandolins, dulcimers and banjos -- a departure from the full-line music shop that his father, Nelson, ran in the same building before Emory started his business in 1980. Knode also displays a few "Americana instruments from the early 1900s that were sold door-to-door," such as as a Marxophone, a concert harp and ukelin. "They're museum pieces. No one's playing or buying them. Most of them are horrible sounding," he says. "Just as you think you've seen them all, another one stumbles in."

"I've spent too many hours for it to be a hobby," contends John Sprung, president of the American Guitar Center at 12255 Viers Mill Rd. in Wheaton. "I throw every cent back into the business." A major investment was a computer system that, among other things, serves as a kind of "guitar dating service" to match buyers with instruments. Sprung says revenue has been climbing steadily since he and partner Ed Eastridge opened the store in November 1983.

Sprung, who had collected and traded guitars from his home in Wheaton for 15 years before opening the store, numbers among his prized offerings a Gretsch 1955 Roundup guitar with a cowboy motif, an 1891 Martin acoustic guitar, a number of "lap steel" guitars that were predecessors of electric guitars and a one-of-a-kind 1962 Fender Stratocaster electric guitar made in see-through Lucite to illustrate its inner workings. Its price tag today: $10,000.

"I love dealing vintage guitars, but I'm in it for the money and it's definitely profitable," concurs Gil Southworth, owner of Southworth Guitars at 4816 MacArthur Blvd. NW. Southworth, who dealt instruments out of his home for 11 years before opening the store, specializes in 1950s Sunburst Les Paul models, one of which he recently sold for $11,200. "A surprising number of people will buy fairly expensive guitars," he says, noting that one customer has bought 21 in the last year and a half. "I think it would be a lot harder selling new stuff, because there's so much competition. With used and vintage stuff, a lot of times you might have the only one like it in town, and you don't have to cut your throat on the price."

The vintage guitar craze is such that some music stores, such as Washington Music Center at 11151 Viers Mill Rd. in Wheaton, are doing a business not in the vintage guitars themselves, but in reproductions of them. "A real vintage guitar is worth a fortune. . . . It got to be a hype that snowballed. But the market will bear it," says Paul Shine of Washington Music Center.

Steven Spellman, owner of The Guitar Shop at 1216 Connecticut Ave. NW, agrees that "vintage instruments have seen a startling upturn." But Spellman, whose shop was founded in 1922 by Sophocles Papas, says he offers services "that are guaranteed to lose money," such as lessons, obscure parts that have been stocked for 60 years, and a complete selection of classical music, "because of a sense of responsibility to those who play."

"As we move away from small stores, we, as a culture, will lose," says Spellman, who claims his store is the country's oldest continuous dealer of Martin guitars, which were first made in 1833. "We are not a music store. We're a guitar shop. I don't know a thing about trumpets," he notes.

Giant corporations, on the other hand, "move from one thing to the next. They're only interested in the bottom line. We're interested in the long term. That's why we're still here, and haven't moved on to autos or whatever the next hot thing is."

Violin dealers, too, say sales have been brisk. "Thanks to Suzuki teaching method , there are probably more kids playing the violin than there were five years ago," says Bill Weaver, owner of Weaver's Violin Shop at 7200 47th St. in Chevy Chase, which moved 4 1/2 years ago from downtown Washington because of a lack of parking. "Sales have increased every year for the last five or 10 years," he says. Weaver's, founded in 1898 by Weaver's grandfather, Herman, has sold four Stradivarius violins this year, the oldest made in 1685. The most recent buyer was Baltimore Symphony concertmaster Herbert Greenberg.

"When you're dealing with instruments that cost $10,000 and even as much as half a million dollars for a Stradivarius, of course there's an opportunity to make money," Weaver says. But he emphasized that "the day-to-day portion of the shop is the student musician and the teacher. That's the bread and butter. The Strads are just an exciting byproduct. . . . We don't look over the heads of the local people. The $500 violins are where the Strads all began. So we nurture those roots."

"Washington is a good town to have a violin shop. If anything, it's constantly able to absorb more fiddles," says Bill Gailes, sole proprietor of Gailes Violin Shop at 9903 Rhode Island Ave. in College Park. "There was one bad year when we were in the red, but we've been profitable every year since then," notes Gailes, who has been in business 10 years. "There's a certain romance and mystique to old instruments. If anything, a lot of times you can pick up a good bargain with a newer instrument. But fiddles season, like wine, so there's a foundation of truth to the mystique."

As with vintage guitars, the scarcity and mystique hikes prices. A Stradivarius has been sold for as much as $1 million, notes Mary Lee Esty, owner of Esty Violins at 7700 Norfolk Ave. in Bethesda. Even the low-priced instruments can't be described as "cheap" -- they can cost $1,000 or more, she says. A vintage bow alone can go for $10,000.

"The price of old instruments can be almost unlimited because of scarcity," says Gerald Brobst, owner of Brobst Violin Shop at 2760 Duke St. in Alexandria. "This area is fertile, and there's a sizable demand for fine instruments that could include old as well as new. . . . Each dealer's offering varies," and, as a result, "competition is almost nonexistent. Whatever a dealer has is unique."

In a completely different field, Frank Toperzer, owner of Drums Unlimited Inc. at 4928 St. Elmo Ave. in Bethesda, says his store "is doing fine. We have no complaints at all." Toperzer operates both a professional rental service and a retail business that includes vintage and custom-made instruments, "some very freaky, some old."

Toperzer blames some of the industry's problems on itself: "The music industry is its own worst enemy. It still thinks it's 1930 and Harry James is going to come along and rescue it, and everybody is going to want to play the trumpet. . . . The industry is an idiot if it expects schoolteachers or Prince or somebody like that to be its promoter."

Tom Turrisi, owner of the Left Hand Guitar Shop and Guitar Haven at 6615 Backlick Rd. in Springfield, sounded another sour note. According to Turrisi, the vintage guitar craze has plateaued because of cable TV's Music Television channel, which "pulled performers off the highway." Turrisi, who touts the quality and versatility of brand-new guitars, is owner and president of Shane Musical Instruments Inc., also based in Springfield, which is producing guitars in Japan made to his specifications. "I'm not going to lose sleep anymore over where to find a 1957 Les Paul," he vows. "For every one I sell, I sell a dozen new Les Pauls."

According to Turrisi, the Washington area "has never been known as a vintage instrument town. . . . It is still a very political, military type of town. That's the type of clientele it caters to."

But Eisner, whose store has been in three locations, strongly defends this area. Eisner discovered House of Musical Traditions, founded in 1967 by Appalachian dulcimer maker Hank Levin, in a loft above St. Mark's Theatre in the East Village in New York City. Levin sold the instrument store to Eisner "for a small, small amount of money" in 1972, and Eisner, who was born in New York and grew up in New Jersey, moved it to its current location in Takoma Park eight weeks later. In 1975, however, Eisner "took a big, big chance" and moved the store to a Victorian house in Berkeley Springs, W. Va., "as I became a member of the Back to the Land movement," he recalls.

But the same space at 7040 Carroll became available again in 1981, and Eisner moved the business back. "The city boy turned country boy would now be a city boy again."

Washington, he says, is "the international city. We've got everything. The embassies. . . . We can call the Thai embassy if we're looking for a Khene a bamboo reed-like instrument . . . We have Fairfax and Montgomery, two of the three richest counties in the nation. A strong emphasis is placed on culture and the arts. We have the Washington Folklore Society, the most efficiently run and one of the largest folk societies in the country.

"Washington is an exceptional town, and Takoma Park is the folk capital of the nation's capital. New York City is madness. You probably can make lots of money there, but that's not my goal. West Virginia is serene, beautiful and incredibly peaceful. But it's a little too far away."