Hello, my name is***** and I have over 20 years of experience as a veterinarian.
I'm sorry to hear that Ollie has a bump above his tail that has been present for a while and now is draining a bloody discharge.
This sounds like a sebaceous cyst that ruptured. What you are seeing from the outside is just the tip of the iceberg so to speak. Sebaceous cysts are mostly under the skin and consist of a pocket lined with oil glands that are producing sebaceous material into a central pocket under the skin. They may sit quiescent for a long period of time and suddenly become a problem if they get infected. This debris is great food for bacteria and they can easily become inflamed and infected leading them to rupture, as your fellow's did. Ideally we treat the cyst with antibiotics and shrink it as much as possible, then surgically remove what is left. If we don't remove the abnormal pocket of glands then the cyst will continue to grow and probably become a problem again, with a larger area rupturing open.
Treating the top of the cyst with antibiotic ointment does not address the true problem underlying the skin, but it may help stop the bleeding and discharge today. I recommend shaving the hair around the lesion then warm compressing and putting gentle pressure around the lump to get as much of the sebaceous material out as possible. Then apply a little pressure, pat dry and apply antibiotic ointment on the draining area.
It is sometimes possible to use systemic antibiotics to shrink the cyst and the skin heal over with the cyst remaining quiescent for a long while again. It would be reasonable to try that. If the skin refuses to heal even with systemic antibiotics, or the cyst starts to enlarge again then we know that surgery really is the only option.
Please let me know if you have any further questions.